The Alberta government has gone on the offensive against Europe’s proposed fuel-quality directive with a new study that shows the oil sands production is only slightly more greenhouse-gas intensive than crudes already used in Europe.
Alberta and the federal government have lobbied aggressively against the European low-carbon fuel proposal, saying it would discriminate against Canadian-based crude producers with an unscientific approach to reducing greenhouse gases (GHG).
In a provincially sponsored study to be released Wednesday, Jacobs Consultancy concludes that oil sands crude is indeed among the most GHG-intensive sources of crude available, but that the difference is smaller than critics suggest.
Alberta insists it recognizes the need to reduce greenhouse gas emissions from transportation fuels, and does not oppose the European proposal in principle.
“But we object to discriminatory treatment by singling out oil sands-derived fuels without sound scientific justification as proposed in the EU fuel quality directive,” said Bart Johnson, director of communications for Alberta Energy.
The European Union has postponed a decision on the directive until early 2013, but proponents continue to push for its adoption, and environmental groups worldwide continue to target Canada’s oil sands as a particularly carbon-intensive source of “dirty oil.”
Canadian producers are facing real economic challenges from international critics, including well-financed opposition to pipelines and pressure on European companies like Norway’s Statoil ASA and France’s Total SA to limit their investment in Canada.
Canada’s governments and industry fear a European low-carbon fuel regulation would penalize the importation of oil-sands-based fuels to the continent, at a time when U.S. Gulf Coast refiners are expanding their exports of diesel and gasoline. There is also a concern the European approach – which copies one adopted by California – will spread to other key markets for Canadian producers.
In the Alberta-sponsored report, Jacobs says the EU has under-estimated the emissions of its current crude supplies, much of which comes from Russia, Saudi Arabia and Nigeria, by neglecting to account for the unreported venting of natural gas that is common in those countries.
The proposed EU standard assigned a value for “well-to-wheels” emissions from crudes used on the continent of 87 grams of carbon dioxide per megajoule, taking into account extraction, processing, transportation and consumption. The EU officials established a value for oil sands crude a value of 107 grams per megajoule, or 23-per-cent higher than the standard for EU fuels.
The Jacobs report concluded Alberta crudes have a carbon intensity only 10-per-cent to 12-per-cent higher than several common crudes consumed in Europe, while 22 of the 26 crudes used in Europe had emissions above the standard assigned in the proposed EU regulation.
And it said that 10- to 12-per-cent gap is likely lower if issues like venting of natural gas are taken into account.
Alberta officials say Canadian producers are essentially penalized because they are forced to account for all emissions from their extraction and processing – including flaring and venting of gas – while foreign competitors are not.
“The EU numbers don’t reflect the actual uncertainty about key data,” said Christopher Holly, branch head for research and technology at Alberta Energy.
“The nature of the data in Alberta is significantly better than almost any other jurisdiction in the world.”