Yesterday marked a rather unremarkable chapter in the ongoing PR battle between the Harper government and much of the rest of the world around Alberta’s oil. On Thursday the EU held a vote on whether to label the oilsands as a dirtier kind of feedstock, a move that would make fuel derived from it less competitive compared to oil refined from “cleaner” kinds of crude. It was a deliberation among technical experts–not elected officials–and it failed to reach the qualified majority required under the EU’s mind-boggling voting system anyway. The vote that matters (by ministers of EU countries) will be held in June.
Nonetheless, both sides sized this virtually irrelevant step in the EU’s Byzantine legislative process to make some noise in the press–there was also news this week that Ottawa threatened a trade war if Brussels goes ahead with the purported fuel-labelling. So it’s as good an opportunity as any to ask: Does Europe have a valid point about the oilsands?
Brussels’ Fuel Quality Directive, as the measure is called, is far from perfect. Andrew Leach, of the University of Alberta, points out that the EU’s classification of different types of fuel, which is based on definitions used by the U.S. Geological Survey, makes some iffy distinctions between oilsands and other kinds of heavy oil that are likely just as polluting. Trying to classify fuels as more or less dirty based on the type of crude oil they came from, concludes Leach, isn’t the best way to go: “The EU FQD, as proposed, will treat some high emissions crudes as low emissions crudes, and they could greatly improve the policy by initially including all … heavy oil production at a high benchmark.” Even Alberta’s Pembina Institute notes that the EU could fine-tune things by “differentiating in the directive between crude supply types (e.g. for heavy oil).”
But the basic message from Brussels is one we should listen to. The oilsands are, after all, a dirtier kind of fuel feedstock and we’d probably be doing a lot better in our global PR crusade if we had made more of an effort to make Alberta’s oil cleaner. Besides, the FDQ, as currently formulated, contains a clause that allows oilsand producers to obtain a lower-carbon fuel label if they can show that their emission performance is actually below the default value associated with their feedstock type, notes Pembina’s Jennifer Grant. Some of Alberta’s producers may already qualify for this. Cenovus Energy, for example, has reportedly found a way of extracting bitumen at roughly the same average emission levels associated with all oil consumed in North America, according to Canadian Business.
There are many other technologies that could reduce the carbon footprint of oilsand wells and mines or otherwise reduce their environmental impact; from the often cited carbon capture to using solvents rather than water to steam the bitumen out of the sands and planting trees to make up for the additional CO2 emissions to synthesizing bugs that can turn oil particles into biodegradable stuff. Some of them are still very much the product of scientists’ imagination, while others have left the lab. But progress in both developing and applying them hasn’t been nearly fast enough.
The federal government has done close to nothing to nudge the industry towards cleaning up its act, and Alberta’s carbon price–at $15 per tonne–is too low to make a difference, says Grant. In Europe, hefty carbon taxes have reportedly led Norway’s state-owned oil company to implement a massive carbon storage project for its North Sea gas rig. And Andrew Heintzman of Investeco Capital adds that federal and provincial assistance could do much to help the industry bring new green solutions from inception to the implementation. In the oilsands, he says, even testing these technologies can cost tens of millions of dollars and require large pilot projects; there may even be a need for the government to provide a sort of laboratory oilsands field to try out different things in a pre-commercial setting.
Since we sell virtually no oil to the EU, the block’s directive (if it passes, which is far from certain) is unlikely to have any short-term economic impact on Canada. But it does set a precedent that others could follow. California, for example, has already implemented a similar low carbon fuel standard. Now, we can certainly argue that there are others more deserving than us of becoming the world’s climate change whipping boy. After all, less than seven per cent of the Canada’s GHG emissions currently come from the oilsands; CO2 from coal-fired electricity in the U.S. pollutes incomparably more than what’s coming out of Alberta; and many other types of crude are associated with a larger well-to-tank carbon footprint than the oilsands’. But the fact remains that the world’s oil importers are increasingly demanding a cleaner kind of oil–and we need to sell the stuff.
Of course, we could always just export to China. The alternative, though, seems more attractive: sell to China and others, help to keep the planet a little cleaner and cooler, and possibly become more well-liked. It might be worth the investment.