Canada Minister Sees Better Prospect of Change to EU Oil-Sands Law

OTTAWA - Canadian Natural Resources Minister Joe Oliver said the possibility of changes to a proposed European Union law that seeks to treat Canadian oil-sands crude as dirtier than conventional fuel have improved, because the law would increase costs and threaten the competitiveness of European refineries at a time when the continent's economy is struggling.

The European Commission, the EU's executive body, is considering singling out crude from Alberta's oil sands as being dirtier than other fuel types in a revision to its Fuel Quality Directive, or FQD, a law designed to lower carbon emissions from transportation fuels.

"We believe that the prospects for an improvement--for fundamental change here--are better than they were a year ago," Mr. Oliver told reporters on a conference call from the U.K., adding that "the issue of competitiveness, including in the refinery industry "are really very much top of mind."

He said Ottawa would consider taking action against the EU at the World Trade Organization as a "very last resort."

Canadian officials, who have long lobbied against the proposed law, say it discriminates against oil-sands crude and isn't based on science. The issue was re-ignited recently as Canada and the EU try to conclude a free-trade agreement that's been four years in the making. Officials from both side have repeatedly said the FQD and trade negotiations are being kept separate. A decision on the FQD is expected later this year.

Mr. Oliver said oil-sands opponents are unrealistic in lobbying for a world powered by alternative energy, and their message could "hurt the economy in a significant way." He said Canada wants its approach to climate change "to be based on reality" and will focus on reducing greenhouse gas emissions while continuing to invest in green energy and technology.

Meanwhile, Mr. Oliver said opponents of TransCanada Corp.'s proposed Keystone XL pipeline are getting "desperate," as U.S. decision on the controversial project nears, hence "the shrillness of their arguments, the hyperbole and the exaggeration that we're hearing from some sources."

Mr. Oliver said the project would be "very positive" for Canada and the U.S, creating jobs on both sides and contribute to economic growth.

The Obama administration is expected to make a decision on Keystone later this year.