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OTTAWA — Environmentalists are warning the European Union’s proposed fuel-quality directive could curtail imports of oil-sands-derived diesel from the U.S. Gulf Coast and drive down the price of Canadian crude.
It’s a warning that Natural Resources Minister Joe Oliver is clearly taking seriously as he visits European capitals to argue that the proposed fuel standard unfairly discriminates against Canada and underestimates emissions of crude now imported into Europe from countries such as Nigeria and Russia.
The standard assesses penalties for high-carbon fuels. Mr. Oliver wants the EU to revamp the existing proposal to reduce the difference in how it would treat oil sands producers versus other sources of oil.
While Ottawa’s objections were once based on fear of a negative precedent that could migrate to this side of the Atlantic, it is now clear the proposal could have tangible impacts on the North American crude market. Canadian producers and U.S. refiners increasingly see Europe as an attractive export destination – both for crude from Canada if a west-to-east pipeline gets built, and for petroleum products made from Alberta bitumen refined in the U.S. Gulf Coast.
A study being released Wednesday by the Brussels-based group Transport & Environment concludes that the directive would drive down Canadian prices by reducing the global market for products derived from oil-sands bitumen.
The fuel quality directive (FDQ) would provide “a powerful incentive to shift investment away from ultra-high-carbon feedstocks to lower-carbon ones, with significant ensuing environmental benefits,” the report said. It estimated the lower oil sands production would result in a reduction of 19 million tonnes of carbon dioxide a year, the equivalent of taking seven million cars a year off Europeans roads.
But Natural Resources Canada noted Tuesday that California has released its own low-carbon fuel report listing several widely traded crude types, including those from Nigeria, Russia, Venezuela and Angola, that produce greenhouse gas (GHG) emissions well above the European standard for “conventional fuels” under which they will fall.
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