Canada warns EU on oil sands ranking plan

Sun Oct 23, 2011 4:22pm EDT
 
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By Jeffrey Hodgson

TORONTO (Reuters) - Canada warned on Sunday it will "defend its interests" if the European Union (EU) goes through with a proposal to rank Canadian oil sands as a highly polluting fuel.

In a letter to EU Energy Commissioner Guenther Oettinger, Canadian Natural Resources Minister Joe Oliver also said the European Commission's Fuel Quality Directive (FQD) potentially violates the EU's international trade obligations.

"Canada objects to policy measures that ignore evidence-based approaches to meet the stated goal of the FQD, in favor of what appears to be an asymmetrical and arbitrary proposal," the letter said.

"If unjustified, discriminatory measures to implement the FQD are put in place, Canada will not hesitate to defend its interests."

The letter is part of a broader push by Canada, the western province of Alberta and the energy industry to sway the EU from labeling the lucrative export as inherently dirty.

The government of Alberta, home to the bulk of Canada's oil sands, has written to EU experts voicing "grave concerns" that the bloc's plans to rank unconventional oil as a highly polluting fuel are unfair and a potential threat to trade ties.

EU legal advisers have said the proposals can probably be defended if Ottawa challenges the move at the World Trade Organization (WTO).

Canada exports no oil sands-derived crude to Europe, but government and industry officials worry that tagging the supply as much more carbon-intensive than other crudes could set a costly precedent for current or potential markets.   Continued...