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  • How Canada and the oil industry undermined Europe’s fuel quality rules

    The Fuel Quality Directive (FQD) was first proposed in early 2007 as part of the so-called “integrated approach”, to ensure that the oil industry would also contribute to the fight against climate change. Its implementation has been frequently and quietly delayed until the end of 2014 due to massive amount of lobbying by oil interests.

    It has not always been like this – in its first consultation paper on how to implement the FQD in 2009, the Commission included a tar sands value of 107g CO2/MJ. This paper was just a basis for discussion with the stakeholders in the debate on how the FQD should continue. One of the stakeholders – the government of Canada – went a bit further than usual by sending ambassador’s letters to the Commission, asking them to remove the tar sands value as this would be discriminatory towards Canada. Soon after this, the tar sands value disappeared from the draft measures that were leaked in early 2010.

    In October 2010 – under intense lobbying by Canada – the Commission agreed to delay the introduction of the tar sands value until the end of 2011, while it conducted more research. It commissioned a study by Professor Adam Brandt from Stanford University to look at the carbon intensity of both tar sands and oil shale and to advise whether these values should be included in the law. In February 2011, the Commission announced that it would propose a value for tar sands, as Professor Brandt’s research backed it up. This lead to the original official proposal from October 2011, which had specific values for tar sands, oil shale, coal-to-liquid and gas-to-liquid and company-specific reporting – making the oil industry accountable for what they sell in the European market. This law provided a strong disincentive for companies to import dirty oil to the European market and, if adopted, it would have led to 19 million tonnes of additional CO2 savings – the equivalent to removing 7 million cars from the roads.

    Following this proposal, Canada increased its lobbying offensive, spending millions of dollars, traveling around all EU countries to block this law with the help of the oil industry and Canadian embassies around Europe. This aggressive lobbying had an impact and in February 2012 the vote on the proposal in a committee of EU member states ended with a deadlock – there was no majority in favour or against the proposal. As a result, the implementing rules went back to the Commission, which had to decide whether or not to modify them.

    The Commission decided to address some concerns of member states and undergo a complete impact assessment of its proposal, launching additional consultations, leading to long delays in the process. In August 2013 the impact assessment was finalised, but there was still no sign of the proposal. The shocking news came in January 2014, when the Commission decided in its 2030 climate and energy communication that there was no need to continue with the FQD decarbonisation target post-2020. This happened in a rather unusual way, as a unilateral decision by the Commission, which normally has to consult with the stakeholders and other institutions. The decision to drop the target was just one sentence in a much bigger package on 2030 climate and energy policy, but it had significant impacts on implementation.

    Meanwhile, the first shipments of tar sands crudes started arriving in Europe amid public protest, and European refineries started investing in upgrades that would allow them to process tar sands. The intense negotiations on the ambition of the proposal were also overshadowed by the Russia-Ukraine crisis, which biased political concerns towards energy security.

    In October 2014, the Commission finally published a diluted proposal. Despite the fact that the impact assessment confirmed that separate values for tar sands and company-specific reporting leads to minimal administrative burden and is the most environmentally robust option, they chose the weakened option. This angered the European Parliament, which later blocked the proposal in its Environment Committee, while in the plenary session the proposal fell a few votes short of the qualified majority needed to block it for the lack of ambition.

    After more than five years of delay, the FQD can now be implemented – it still has a tar sands value of 107g CO2/MJ, but the oil companies do not have to report whether they are bringing tar sands to Europe and are not held accountable for any emissions increases. We could say that the final result is going against the original purpose of the law by not discouraging the use of the most polluting fuels in Europe and that there are some lessons that can be learned on this by the new Commission.