Commission deals with tar sands problem by ordering impact study

The Commission is postponing a decision on how to assess the climatic impact of non-conventional sources of transport fuel such as tar sands and oil shale. A decision was expected in June, but Brussels has ordered an assessment of the impact of giving high-carbon sources a higher climate rating, which means no final judgement will be made until next year. The postponement came just days after T&E published a study saying reducing greenhouse gas emissions from petrol and diesel production will cost less to administer than the oil industry says.

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The Commission has told member states it had decided to order a full assessment of the impact of giving tar sands and oil shale higher emissions values than fuels made from conventional crude oil. An official said there was no majority either in favour or against assigning different emissions values to unconventional fuels, so the decision to order an impact assessment was an attempt to win the support of those who oppose the differentiated emissions values the Commission has proposed.

T&E fuels programme manager Nuša Urbancic said: ‘This is a frustrating delay, but we are confident the impact assessment will show that the implementing rules proposed by the Commission will have large environmental benefits for very low cost, as has been shown by our report.’ A spokeswoman for Climate Action Network Canada said: ‘This decision calls big oil’s and the Canadian government’s bluff. It will put an end once and for all to the disingenuous claims about the science and costs that are getting in the way of Europe’s efforts to reduce greenhouse gases.’

The proposed differentiated values for fuels extracted from unconventional sources are a sub-section of the EU’s fuel quality directive. The directive sets a target to reduce greenhouse gas emissions from fuel production by 6% over the period 2010-20, and to achieve this it will have detailed rules for implementing sub-targets that will lead to the overall 6% reduction. These detailed rules include reporting requirements and giving fossil fuels different emissions values based on how much carbon dioxide they emit during the whole extraction and refining process. The Commission has proposed a value for tar sands 23% higher than the value for oil from conventional sources, and a value for oil shale 50% higher than conventional fuels.

The directive was agreed in 2009 but the detailed rules are proving difficult to agree, largely because a massive lobbying effort by the Canadian government and the oil industry has contested the principle of giving tar sands and oil shale a higher climate impact value than conventional fuel, despite the additional energy needed to extract oil from tar sands and shale. The European oil producers’ umbrella Europia has also said the 6% reduction would impose a ‘disproportionate administrative burden’ on producers and add a dollar to the cost of a barrel of fuel, which in turn would force some refineries to close.

Yet severe doubts have been cast on these claims by a new report produced for T&E by three Dutch consultancies (CE Delft, Carbon Matters and Energy Research Centre). They have found that the administrative and reporting costs of the proposed new rules would be between €40 and €80 million a year, or 0.8-1.6 cents a barrel. This would mean drivers paying less than half a cent on an average fill-up.

The report also shows that refineries would not put the EU oil industry as a competitive disadvantage as it proposes equal treatment of EU and non-EU refineries.

Urbancic added: ‘This independent study shows that most of the reporting needed for this legislation is already being done, which is why the administrative costs would be so negligible. In fact the Commission’s latest proposal makes compliance with the target cheaper, as it offers the oil industry a whole range of options for lowering their emissions, including reduced flaring, cutting imports of fuel extracted from high-carbon sources such as tar sands, and cleaning up production processes. It’s in the EU’s and the industry’s interests to see that high-carbon oil has no future if we are serious about reducing transport emissions.’ 

Europia has contested the findings but has yet to produce evidence to support its claims about the high administration costs the oil industry would face in implementing the proposed rules.

Download the report