Canada says EU oil spat not linked to trade talks

Wed Feb 23, 2011 4:07pm EST
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By Allan Dowd

VANCOUVER (Reuters) - Canada is concerned about possible European import restrictions on crude from its vast oil sands, but a fight over the industry's emissions will not have an impact on trade talks with the European Union, Ottawa's Trade Minister said on Wednesday.

Peter Van Loan denied reports by EU sources that Canada has threatened to scrap a proposed multibillion-dollar free trade deal if Europe goes ahead with new rules to promote greener, low-carbon fuels as part of a strategy to curb greenhouse gas emissions.

Europe's trade and climate chiefs are preparing to take a stand against imports of oil from Canada's tar sands, a major source of greenhouse gases, despite fears that two-way trade would suffer as a result, according to EU sources and documents.

"This issue is being dealt with separately from the free trade discussions, so I do not anticipate it will have an impact on the timing or the outcome of those free trade talks," Van Loan said in Vancouver

"That said, we are very concerned about the proposed fuel quality initiative of the European Union," Van Loan said.

European officials had backed away from the fuel plan last year, but have now decided to move forward again after checking the methods used to measure the carbon footprint of various fuels, according to internal EU documents and sources.

Environmentalists say using crude from the oil sands has an increased impact on the climate because of the amount of energy needed to extract the tar-like oil from the sediment -- a claim the energy industry disputes as being outdated.

Van Loan reiterated Ottawa's position that the science does not support restrictions on crude from the oil sands of northern Alberta, the second largest proven oil reserves after Saudi Arabia.   Continued...