Canadian Government Threatens EU with Trade Action Over Oil Sands

Canada's Oil sands are once again in the news. This time, it is Canadian diplomacy at its worse: threats of trade complaint against the EU, if its Fuel Quality Directive classifies Oil sands crude as more harmful to the environment than other fuels, which essentially bans it. Although there is no Alberta crude in Europe, this latest stand is all about reputation. [1] A special EU committee is scheduled to vote on the directive February 23rd before a European parliamentary vote.

The incident cements Canada's position of support for the long-term use of fossil fuels regardless of a global call for climate change mitigation. For companies with Oil sands operations, this latest headline will likely fuel controversy about federal interests in pushing a resource that while it has a market, also garners little public support in Europe and North America.

OIL SANDS: ONGOING CONFUSION

In the public sphere there is confusion as to the extent of the Oil sands' environmental footprint, due to mixed messages from industry, government and NGOs.
Recently new research by University of Victoria scientists Andrew Weaver and Neil Swart was published in the journal Nature. It calculates the climate impact - or global warming potential - of oil, gas, and coal based on their carbon emissions. The findings surprised the researchers and many others: coal, not oil sands crude, has the greatest potential to drive global warming.

While the report is seemingly good news for industry, Neil Stewart clarifies that globally, other countries have oil and coal resources, and so collectively, exploitation of fossil fuels must be curtailed. In a Financial Post article he also notes, "Making long-term commitments to fossil fuel usage and committing ourselves to that through large infrastructure projects like the Keystone XL pipeline is inconsistent with that goal of transitioning to a low-carbon society."[2]

Weaving through the abundant communication on the topic, one thing is for certain - Oil sands production is not clean; its environmental footprint is big. Aside from significantly higher GHG emissions than regular crude [3], there is also water pollution from air and tailings ponds, and water allocation issues in the mostly dry province of Alberta. Then there is harm to wildlife due to habitat loss with land use changes, as production areas expand. Aside from the environmental issues, there are also social problems attributed to towns like Fort McMurray where population explosion - specifically a young, transient worker community - is facing issues of housing shortage and drug addiction.[4]

To combat environmental and social issues, Oil sands companies have invested in the development of new technologies and solutions that address environmental issues, as well as implement employee and community investment programs. Regardless of progress, there is still work to be done and there is no denying the Oil sands is proving to be tricky business for companies and governments alike.

WHERE BUSINESS FITS IN THE DIALOGUE

Unfortunately for the Europeans, raising doubts about Canadian Oil sands has attracted an aggressive lobby campaign by the Canadian Association of Petroleum Producers (CAPP) and the Canadian federal and Alberta governments. This is according to a 2011 investigative report by FOEE titled: "Canada's dirty lobby diary: Undermining the EU Fuel Quality Directive". The report details Canadian government and some CAPP members' efforts to interfere with the directive.[5]

And so while Canada defends the oil sands industry by withdrawing from international agreements such as the Kyoto Protocol, or through bullish diplomacy, it calls into question one how far this country will go to support fossil fuels.

NOTES

[1] CBC News, published Feb 20, 2012: http://bit.ly/zVxHvh
Globe and Mail, published Feb 20, 2012: http://bit.ly/ADm0Od
[2] The Pembina Institute: http://bit.ly/wTDRSg
The Royal Society of Canada Expert Panel: http://bit.ly/wrSfFf
[3] Drug Rehab: http://www.drugrehab.ca/fort-mcmurray.html
[4] Financial Post, published Feb 21, 2012: http://natpo.st/yGccLd
[5] FOEE, August 5, 2011: http://bit.ly/nKG3mJ

Photo Credit: Suncor 2011 (by Jasonwoodhead23)