Tensions between Canada and the European Union (EU) have been running high, with the EU’s October 4th proposal to add tar sands to its ranking of green fuels. The bid sets out to label tar sands as an exceptionally polluting source of oil. In provinces such as Alberta, where the extraction of oil from tar sands is a primary source of revenue, the industrial and economic effects of such a label will be a highly inconvenient burden.
It is believed that consumers hoping to reduce their carbon footprints will turn to allegedly less polluting sources of oil, putting Canada’s oil exports at a disadvantage. This has sparked allegations of trade discrimination. The government of Alberta and other Canadian oil sands groups believe that the addition of oil sands as a separate category is discriminatory due to the fact that it is essentially a source of crude oil, and should be ranked as such. In Canada’s case, it is also apparent that the Albertan oil sand operations have adopted many green initiatives. These initiatives include the use of hard water in extraction and various projects such as Carbon Capture and Storage, which are implemented to reduce waste, carbon emissions, and the use of resources. Worldwide, there are various ways to derive crude oil, many of which are even more carbon-intensive than tar sands extraction. To put all these more ‘conventional’ sources into a single category and then to single out tar sands is unfair to the tar sands businesses. The European experts have found greenhouse gas levels pertaining to the different categories, which imply that other forms of crude oil are less carbon-intensive than crude oil removed from tar sands. They have found that oil sands emit a greenhouse gas level of 107 grams of carbon per mega-joule produced, which may push consumers to import conventional crude oil, which have been assigned a generalized value of only 87.5 grams per mega-joule.
It is primarily these fears driving the desire to exclude tar sands from the ranking, or to at least modify the level suggested by the European environmental experts. From an economic standpoint, the green fuel ranking will be damaging to Canada. Britain and many Eastern European countries also support Canada’s view. Estonia is displeased with the ranking system because their primary oil source, shale oil, is also an unconventional source of crude oil. Shale oil has been assigned a default value of 131.3 grams per mega-joule, and coal-to-liquid, a third unconventional source, has been assigned a level of 172 grams.
The debates have come amidst attempts between Canada and the EU to reach a free trade deal and may cause problems in reaching any sort of decision. For now, the European Union remains divided over the fuel ranking topic, and no vote is expected to be held until December.
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