EU fuel directive demonizes oil sands

Contributed to The Calgary Herald
Greg Stringham
Vice President of Oil Sands
Canadian Association of Petroleum Producers
August 12, 2013
Anti-fossil-fuel activists seem to think Canada's oil sands are about to trigger the end of Earth as we know it and in recent months, they've turned their attention to Europe, where the European Union is considering a Fuel Quality Directive (FQD) policy.

It's one thing to support less use of fossil fuels or development of renewable energy because it produces less GHG emissions than other fuels. It's something else to demonize the oil sands, which currently produce 0.16% - that's 1/630th - of global GHG emissions.

You don't have to be a rocket scientist or an economist to figure that even when oil sands production doubles, GHG emissions won't be any more than 0.32% of the global total - and that's a conservative scenario not accounting for reduced GHGs through applying innovative technology to current processes.

The FQD aims for a 6% reduction in greenhouse gas emissions of fuels used in Europe by 2020, compared to 2010 levels. There's nothing wrong with the objective. But as currently written, the FQD assigns a higher carbon dioxide value to oil sands, even though oil sands GHG emissions are similar to the other globally sourced heavy oils and the conventional oils produced with associated natural gas flaring currently used in Europe.

Nor does the directive encourage transparency from countries not reporting their flaring, and it does not apply the full suite of available science-based data showing a spectrum of carbon values.

The directive treats oil sands crude oil as a unique, GHG-intensive "feedstock" and assigns a GHG value 22% higher than conventional crude oil. To use oil sands crude oil, European Union refineries would need to reduce the GHG intensity of the fuels produced from the oil by 28% - the 6% reduction target and the additional discriminatory 22%.

So why the constant attack on the oil sands when there are so many bigger targets?

The directive treats oil sands crude oil as a unique, GHG-intensive 'feedstock'

It's burning fossil fuel, of course. If we produce more fossil fuel, we're going to burn more fossil fuel, so let's stop producing it. That's the argument. But never does anyone suggest a realistic, achievable alternative.

Our industry doesn't have anything against conservation. It's a good thing. And we don't have anything against renewable energy. Also a good thing. But it's pie-in-the-sky to think those good things are going to replace fossil fuels any time soon.

New economies are emerging and we'll need all forms of energy to meet the rising demand that comes with growth and development. It's not the time to be trying to shut down an industry that's going to meet the lion's share of those energy needs for the foreseeable future.

That's what makes the European Union's plan to bring in legislation that unfairly discriminates against Canada's oil sands so hard to understand. And not surprisingly, the FQD is strongly contested by the Canadian oil and gas industry and by Canadian governments.
Let's be clear: Our industry doesn't object to carbon dioxide reduction plans. We know growing oil sands production must be reconciled with the world's expected transition to an energy supply that produces fewer GHG emissions.

In fact, oil sands companies already pay a government emissions levy in Canada. If we don't reduce GHG emissions by 12% over the life of a project, we pay $15 per tonne under Alberta legislation - that's about three times the price currently paid under Europe's carbon dioxide trading system.

The money paid under the Alberta regulation - about $300-million to date - goes into a fund earmarked by the government for investing in technology to improve our ability to manage emissions.

That's well-designed public policy, unlike the FQD.

We will continue to seek equitable rules in the European Union. Making the case for fairness is also part of governments' legitimate role in advancing Canadian interests.

The oil sands are a global success story and a tremendous opportunity for Canadians. Realizing this opportunity and addressing the challenges that come with it requires well-designed public policy and ongoing focus on technology and innovation to address environmental impacts, improve recovery and drive down costs.

Related
Keystone follies: Canadian oil sands not a major source of climate
Peter Foster: Who monitors the oil sands monitors? -opinion.financialpost.com

Greg Stringham is a vice-president at the Canadian Association of Petroleum Producers

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