By Shawn McCarthy, Globe and Mail, February 23, 2012
Amid heavy lobbying from Canada, a committee of the European Union Parliament blocked passage of a proposed fuel quality directive that would label Alberta oil sands as a more carbon-intensive source of oil than conventional crude.
In a vote Thursday, proponents of the directive failed to win a majority of votes in favour, but neither was there a majority to kill the proposal. As a result, the directive will be taken up by a committee of EU ministers in the coming months.
Key Canadian allies abstained on the vote, including Britain, France and the Netherlands – all home to multinational oil companies that have invested heavily in the oil sands.
The Harper government has been lobbying for two years to prevent the EU from targeting the oil sands due to its high emissions of greenhouse gases compared to conventional crude.
Under the fuel quality directive, EU refiners and marketers would be required to reduce the carbon-content of their overall fuel mix.
Greenpeace said the EU ministers will now be held accountable if they allow Canadian lobbying to defeat a regulation that is meant to battle climate change and reduce emissions from Europe’s transportation fuels.
“Now that the tar sands issue is finally in the hands of publicly accountable ministers, we will see who’s pulling the strings in Europe,” Greenpeace tranport policy adviser, Franziska Achterberg said in a statement Thursday.
“The evidence is clear: tar sands are the world’s dirtiest fuels. The decision is even clearer: the ministers should stand up to the oil industry and ban them from Europe.”
Canada needs an EU win
By Cludia Cattaneo, Financial Post February 23, 2012 2:07 AM,
from Ottawa Citizen website, February 23, 2012
After the mess in the United States over Keystone XL, Canada could really use a win Thursday - or at least the benefit of the doubt - when the European Union votes on whether to label oil from the Alberta oil sands as "highly polluting."
A vote in favour of the Fuel Quality Directive would signal that attitudes against the oil sands are hardening, even as far away as Europe. It would also stand out as another home run for the environmental movement and its strategy of picking on the Canadian sector to push its climate-change and off-oil agenda.
Meanwhile, a vote against the directive would set a favourable policy precedent for Canada as it courts new markets for oil sands crude. It would also show its intense lobbying and education efforts in Europe over the past few months are working.
The directive, driven by EU Commissioner for Climate Action Connie Hedegaard, sets a mandatory target for fuel suppliers to reduce the carbon footprint of fuels by 6% over the next decade. The oil sands would be ascribed a higher greenhouse value (107) than average crude oil (87.5), if byproducts are ever sold there.
Worried the EU would be unfairly discriminating against the oil sands, the Canadian government and the oil sands industry mounted an aggressive campaign to ensure greater understanding of the business.
While seen as sinister in the European press, the effort was entirely justified following years of unfettered anti-oil sands bashing by environmental NGOs, which no doubt influenced the EU's bizarre targeting of Alberta's oil even though it's not sold there.
Greg Stringham, vice-president for oil sands at the Canadian Association of Petroleum Producers, led the industry campaign. It involved a co-ordinated approach with the federal government, European oil companies with oil sands operations - Royal Dutch Shell PLC, Total SA, Statoil ASA and BP PLC - and the large cohort of European suppliers to the sector.
Read more: http://www.ottawacitizen.com/business/Canada+needs/6194911/story.html#ixzz1nCRRodL4
By Lawrence Herman, Globe and Mail, February 22, 2012
Lawrence Herman is international trade counsel at Cassels Brock & Blackwell LLP and a senior fellow at the C.D. Howe Institute (A Canadian Right-wing Think Tank)
Will there really be a trade war with the European Union over imports of Canadian fuel from the oil sands?
The media have been reporting it this way, based on letter sent in December to the EU environmental commissioner by Canada’s EU ambassador. It said that if the proposed EU fuel quality directive (FQD) is enacted, Canada will march to the World Trade Organization.
There’s a fundamental WTO legal issue at stake in the ground war.
It concerns the WTO prohibition against governments discriminating against “like” goods from different countries. This is the famous most-favoured-nation treatment rule. It requires fully equivalent treatment to imports of “like” goods wherever they come from. And the equally famous “national treatment” rule means that you can’t discriminate against imports in favour of “like” domestic products. It means that all duties, taxes or other border measures – such as carbon offset requirements – that differentiate between these “like” goods are WTO-illegal.
The question comes down to what is “likeness” in WTO terms.
Numerous WTO panel decisions have said that “likeness” is based on the intrinsic nature of the goods, not how they are made. Likeness is determined by physical properties, usage and, importantly, whether the goods compete in the same market. It is the direct “competitiveness” of the goods that is normally critical in determining likeness, according to these decisions.
How the goods are made – production and process methods – is not a differentiating factor when the imported goods are like domestic products and other imports in every other respect. A 2011 WTO Secretariat Working Paper examined the jurisprudence in depth going back many years and concluded that border measures based on production methods that don’t affect the “likeness” of the final product would be in contravention of the WTO Agreement.
Coming back to the Canada-EU dispute, the issue is this: Can the EU apply differential border measures – such as carbon offsets – on fuel from Canada that is produced from bitumen but is “like” conventional fuels in terms of physical and chemical properties, end-usage and, importantly, that competes in the same market?
Canada says definitely not. Admittedly, each case must be looked at on its facts, but WTO jurisprudence leads to the conclusion that Canada is right.
Today's vote will bring some attention to the divide between the big oil companies and government attempts to rein in the conditions that contribute to global warming and climate change.
If the vote goes "thumbs down" for Canada, along with the postponement of the Keystone Pipeline postponement in the U.S., it will signal a significant set-back, in world opinion for the oil sands project.
A "thumbs up" vote would be a very different kind of signal for the developers of the project, and the Canadian government which is "all in" the fight for the trade opportunities selling Canadian crude to European countries could provide.
This vote could signal other votes in other jurisdictions over the question of fracking in order to recover natural gas from under the earth's surface, using chemicals that can potentially contaminate the water resources for millions of people.
The U.S. and Mexico have also entered into an agreement to open up the Gulf of Mexico to more energy resource exploration, believing there is a substantial amount of both gas and oil waiting to be "harvested" in that venue.
However, the energy needs of a world economy and the climate needs of a world's population that really quite simply needs to breathe clean air, and to drink clean water have to be reconciled. It is a new equation which continues to evolve with each chapter in its development. And the balancing act that is required could conceivably be beyond the learning curve of most political operatives who will cast their votes as the issue raises its head.
For each community, big oil and the environmentalists, these are perceived as existential threats, in one case to the industry and in the other to the world's health. However, the road to solving the equation does not necessarily lead to apocalyptic fears on either side. It could and should lead to some very hard-headed and honest, and scientifically based exchange of both ideas and the best information available, from both sides. However, it appears that the world community might have to strengthen its "deciding apparatus" like the WTO, or the World Court in order to best litigate these monstrous issues...and one has to ask if the questions are not becoming larger than the capacity of those making the decisions can legitimately tolerate.
Do we, in short, need some international judicial body deciding how to balance the needs of the economy with the needs of the environment, so that countries can find some standards or benchmarks with which to guide internal, national decisions?