• EU dampens market for high-carbon oil

    An informal agreement by MEPs, representatives from EU member states and Commission officials on the proposed EU fuel quality directive could prevent a market developing for the most carbon-intensive sources of oil such as tar sands and oil shale.

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    The agreement, reached last month, sets a legally binding target to reduce greenhouse gas emissions from fuel production. The original target proposed by the Commission in early 2007 was for a 10% cut by 2020 – this has been reduced to an obligatory 6% and a voluntary 4%.

    T&E says the target has the potential to cut demand in Europe for the most carbon-intensive oil production methods such as extraction of oil from tar sands and oil shale. California has adopted similar legislation.

    A low carbon fuel standard in American and Europe would effectively create a secondary ‘sub-prime’ market for high carbon oil worldwide and would severely impact on the economic viability of such sources, which are expensive as well as extremely environmentally damaging to extract.

    Greenhouse gases are emitted from fuel production during exploration, refining, distribution and combustion of the fuels. While emissions from combustion form by far the biggest part (about 85% of current lifecycle emissions), the revised fuel quality directive affects the remaining 15%. The 6% cut means these need to be cut to 9%, or roughly 60% of non-combustion emissions.

    Among the non-binding measures, there are incentives for electrically powered transport. The 4% non-binding target will be reviewed in 2012 and could become obligatory.

    Importantly, the revised directive in its current form would oblige the oil industry to reduce ‘flaring and venting’, two widespread practices that cause unnecessary greenhouse emissions. The potential for flaring and venting reductions is huge, possibly amounting to 10% of the emissions reduction target envisaged by the directive.

    T&E policy officer Nuša Urbancic said: ‘As we have always said, this law makes quantitative targets for biofuels superfluous. We have always argued it is best to promote alternative fuels on their climate performance, rather than prescribe how much of them should be used.’

    The directive also sets lower limits for sulphur in fuels, a move T&E welcomed because it is important for exhaust aftertreatment technology for NOx and particles.

    The law still has to be formally approved by ministers and MEPs.