Product extracted from Canada's oilsands is being attacked
by environmentalists on two fronts: in the U.S. through opposition
to the Keystone XL pipeline, and in Europe, through the proposed
implementation of a fuel standard that purports to seek a
six-per-cent reduction in the carbon intensity of Europe's
transport fuel supply by 2020 - to 83 grams of carbon dioxide per
megajoule of energy (g/Mj).
The two main sources of carbon are driving and the combustion of
coal to generate electricity. A non-discriminatory transport fuel
standard that accurately tracks the carbon emissions generated in
the production and consumption of specific crude blends would be a
legitimate regulatory tool to protect the environment. As designed,
however, the EU's proposed standard is not. Rather, it's a
disguised restriction on trade that violates a number of WTO
provisions, and an arbitrary and unjustifiable means to
discriminate against synthetic crude oil made from Canada's
The EU standard purports to regulate the total life-cycle
emissions of crude oils. Total emissions vary between crude blends
due to differences in upstream emissions (caused by different
production processes), with emissions generated downstream during
refining and consumption being essentially identical for all
"petrol." whether made from conventional or
In fact, some conventional crude blends generate a higher level
of upstream emissions than the lowest intensity unconventional
product from the oilsands, with the EU itself pegging emissions for
various conventional crude blends in the range of 84 to 103 g/Mj,
compared to unconventional crudes with scores between an
overlapping 98 and 122.
Despite the wide range, and the explicit advice from the
EU's key consultant that "regulatory processes will
require detailed crudespecific emissions estimates", the EU
decided to assign one value for all conventional crude blends,
based on weighted imports of fictitious "national average
crudes" over the past 10 years. Since the past decade has seen
the EU import an increasing amount of crude from Russia and Africa
(produced with substantial gas flaring) to replace fast-depleting
"clean" North Sea oil, the result is a conventional crude
value for 2010 of 87.5 that is at least 10 per cent below the real
carbon intensity in 2010 (which is more like 98.3).
Despite knowing that some unconventional crude is cleaner than
certain conventional crudes, officials decided to set a separate
value for unconventional crude of 107.3 g/Mj. Why a separate value?
So that no oilsands crude would score 87.5. Why 107.3? Because the
EU's Californian consultant thought 107.3 to be "most
likely," since he felt it was "likely" that carbon
regulations would discourage oilsands production from using the
highest intensity (122) process, though "improbable" that
regulations designed to reduce carbon intensity would encourage the
importation of the lowestintensity (98) unconventional crude.
The EU's low carbon fuel standard, as designed, is a sham
and pretence that discriminates against Canada and deceives
Europeans (including one suspects, well-intentioned European
politicians). By assigning one value for all conventional crudes,
it will allow European refiners to increase the real carbon
intensity of their crude supply over the coming decade, while
reporting lower carbon intensity for statistical purposes through
And by deeming unconventional Canadian crude that even the EU
has determined is 5 g/ Mj cleaner in fact than the highest
intensity conventional crude to be 20 grams dirtier in law, it
constitutes an arbitrary and unjustifiable act of discrimination
between countries, and against the only nation among all the
non-European oil suppliers that (I) already regulates greenhouse
gas emissions generated from upstream oil production, and (II) is
an energy security ally of Europe through the 1974 Agreement on an
International Energy Program (IEP).
What to do? As part of the current Canada-EU trade negotiations,
Canada should invite the EU to join in the development of a
nondiscriminatory fuel standard for both fossil and biofuels that
is accurate, effective and consistent with international trade
rights and obligations. In the event the EU rejects this
constructive proposal and proceeds with a measure that effectively
says Europe does not want Canadian oil, Canada should not only
challenge the measure in the WTO, but show Europe the message has
been received, by giving the required 12-month notice that it will
be terminating its participation in the IEP.
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The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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