Canada threatens trade war with EU over tar sands

guardian.co.uk , 20 February 2012 by Damian Carrington

The row over the EU's plan to label tar sands oil as highly polluting escalates as Canada says it 'will not hesitate to defend its interests'

Canada has threatened a trade war with European Union over the bloc's plan to label oil from Alberta's vast tar sands as highly polluting, the Guardian can reveal, before a key vote in Brussels on 23 February.  

"Canada will not hesitate to defend its interests, including at the World Trade Organisation," state letters sent to European
commissioners by Canada's ambassador to the EU and its oil minister, released under freedom of information laws.  

The move is a significant escalation of the row over the EU's plans, which Canada fears would set a global precedent and derail its ability to exploit its tar sands, which are the biggest fossil fuel reserve in the world after Saudi Arabia. Environmental groups argue that exploitation of the tar sands, also called oil sands, is catastrophic for the global
climate, as well as causing serious air and water pollution in Alberta.  

Darek Urbaniak, at Friends of the Earth Europe, which obtained the
new documents, said: "These letters are further evidence of Canadian
government and industry lobbying, which continuously undermines efforts to
combat climate change. We find it unacceptable that the Canadian
government now openly uses direct threats at the highest political levels
to derail crucial EU climate legislation."  

The unveiling of Canada's threats is the latest in a series of recent
 embarrassing revelations. On 12 February, the occurrence of a secret
strategy "retreat" in London in 2011 was discovered. High-level officials
discussed the "critical" issue of winning the tar sands argument in the
EU, to "mitigate the impact on the Canadian brand" and to protect the
"huge investments from the likes of Shell, BP, Total and Statoil".
Representatives of Shell, Total and Statoil attended the meeting alongside
the UK's state-owned Royal Bank of Scotland and the Canadian Association
of Petroleum Producers.  

In December, the Guardian revealed the secret high-level help given
to the Canada by the UK government, which included David Cameron
discussing the issue with his counterpart Stephen Harper during a
visit to Canada, and stating privately that the UK wanted "to work
with Canada on finding a way forward". Canada's minister for natural
resources, Joe Oliver, stated: "[The British] have been very, very
helpful."  

The UK proposed an alternative "banded" approach to ascribing carbon
emissions to different fuel types, which does not single out tar sands.
But environmentalists dismiss it as a delaying tactic and the Guardian
understands that the UK has failed to present its proposal formally or
provide supporting evidence.  

In the newly released documents, Canada's ambassador to the EU, David
 Plunkett, wrote in December to Connie Hedegaard, European
commissioner for climate action, about the EU plans under the fuel
quality directive (FQD). "If the final measures single out oil sands crude
in a discriminatory, arbitrary or unscientific way, or are otherwise
inconsistent with the EU's international trade obligations, I want to
state that Canada will explore every avenue at its disposal to defend its
interests, including at the World Trade Organisation." In October, Oliver
wrote to the European commissioner for energy, Günther Oettinger and
Baroness Catherine Ashton, vice-president of the commission, stating: "If
unjustified, discriminatory measures to implement the fuel quality
directive are put in place, Canada will not hesitate to defend its
interests."  

A Canadian government spokeswoman told the Guardian: "We oppose an
FQD that discriminates against oil sands crude without strong
scientific basis. The oil sands are a proven strategic resource for
Canada; we will continue to promote Canada's oil sands as they are
key to Canada's economic prosperity and energy security."  

The European Commission disputes the charge that its plans are not
based on science. Hedegaard told the Guardian: "The Commission
identified the most carbon-intensive sources in its science-based
proposal. This way high-emission fossil fuels will be labelled and
given the proper value. It is only reasonable to give high values to more
polluting products than to less polluting products. I of course hope the
member states will follow the Commission [and vote for] this
environmentally sound initiative."  

Colin Baines, toxic fuels campaign manager at the Co-operative, said:
"There is a wealth of independent science stating that tar sands fuels
emit significantly more carbon than conventional oil, no matter how many
briefings Canada gives claiming otherwise." The EU proposal is to label
tar sands oil as causing 22% more greenhouse gas emissions than
conventional oil on average. The increase results from the energy needed
to blast the bitumen from the bedrock and refine it.  

Baines added: "The Canadian government's aggressive lobbying and
attempted intimidation of the EU is making it look increasingly
desperate. But its threat of a WTO challenge faces one massive
problem: tar sands oil is not a 'like product' with crude oil so no
unlawful discrimination exists under WTO. The EU must adhere to the
science and penalise the higher emissions."  

Many European oil companies have major interests in the Canadian tar
sands. In January, the Guardian revealed a secret compromise plan that
would weaken the impact on tar sands oil, this time from the Netherlands,
home of Shell. BP, headquartered in the UK, had already in their own words
"bent the ear" of the UK's energy minister. Total in France and ENI in
Italy also have tar sands interests and those nations are believed to be
opposed to the EU plan.  

If the FQD proposal fails to win the required majority in the vote on
 Thursday it faces an arduous fight for survival through the European
council and parliament. The UK's votes are seen as crucial, but a
government spokeswoman declined to say which way the UK would vote. The
issue has become a difficult one for the responsible minister, Liberal
Democrat Norman Baker, who frequently supports environmental policies. On
10 February, he said: "For climate change reasons, I do not think it would
be helpful to extend our reliance on fossil fuels any more than
necessary," before a meeting about proposals to extract shale gas using
fracking near his constituency in Lewes.  

His party colleague, Chris Davies MEP, who is the Lib Dem environment
 spokesman in the European parliament, said: "It is extraordinarily
naive for ministers and officials to take the special pleading by
Canada as though it were gospel truth, rather than what it is - an
attempt to protect narrow financial interests." In 2009, Simon Hughes MP,
and now deputy leader of the Lib Dems said: "World leaders must work
towards a treaty that will outlaw tar sands extraction, in the same way
they came together to ban land mines, blood diamonds and cluster bombs."  

In December, Canada unilaterally pulled out of the world's only
binding climate change treaty, the Kyoto protocol, having increased
its emissions of greenhouse gases by a third instead of reducing them by
6%. In public, the Canadian government claimed that tar sands are
"sustainable" but in private it has admitted there is no "credible
scientific information" to support this. Canada suffered a setback in
January, when Barack Obama rejected a proposal for a controversial
pipeline called Keystone XL to import bring tar sands oil from Alberta,
though Republicans in congress are working to  reinstate the pipeline. 

http://www.guardian.co.uk/environment/2012/feb/20/canada-eu-tar-sands