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Canada Threatens Trade War With EU Over Tar Sands

Note: This post was originally published on Earth & Industry

By Silvio Marcacci

Canada has threatened to instigate a trade war with the European Union over a February 23rd vote to label oil from the Alberta tar sands region as “highly polluting.”

The proposal would include tar sands in the EU’s fuel quality directive, (FQD) an official ranking that enables fuel suppliers to identify the most carbon-intensive fuel sources in an effort to meet strict EU environmental standards.

In a state letter to EU commissioners, Canada threatened retaliatory action to an FQD listing. “If the final measures single out oil sands crude in a discriminatory, arbitrary, or unscientific way…Canada will explore every avenue at its disposal to defend its interests, including at the World Trade Organization,” said David Plunkett, Ambassador to the EU. “Canada will not accept oil sands crude being singled out.”

The letter was originally sent in December, and was recently obtained by Friends of the Earth Europe through freedom of information laws.

If enacted, the proposal would assign oil from tar sands a default greenhouse value of 107 grams of carbon per megajoule, nearly 25 percent higher than the 87.5-gram value given to conventional crude oil.  The EU has targeted a six percent reduction in the carbon intensity of its transportation fuels by 2020, so an FQD listing would make tar sands crude exports to Europe much more expensive.

For Canada, the main issue at hand is its assertion the FQD ranking is not based on science, a charge dismissed by EU officials. “The Commission identified the most carbon-intensive sources in its science-based proposal,” said Connie Hedegaard, European Commissioner for Climate Action. “It is only reasonable to give high values to more polluting products.”

This trade ultimatum is just the most recent event in a long line of advocacy against the FQD listing. Canada convened a retreat in 2011 between oil industry representatives and government officials to coordinate lobbying efforts, and has been receiving significant high-level counsel on the issue from the British government.

However, significant support has also arisen in favor of the FQD listing. A group of eight Nobel peace prize winners advocated for the listing, saying in a letter to the EU that “tar sand development is the fasting growing source of greenhouse gas emissions in Canada and threatens the health of the planet.”

If the proposal does not receive a majority vote, it would be transferred from the technical fuel quality committee to open discussion among EU ministers. If this occurs, the proposal could be weakened or even killed because of opposition to the listing by nations with oil majors with tar sands investments like the Netherland’s Royal Dutch Shell, Britain’s BP, Italy’s Eni, or France’s Total.

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