Amid heavy lobbying from Canada, a committee of the European Union Parliament blocked passage of a proposed fuel quality directive that would label Alberta oil sands as the most highly polluting source of oil.
In a vote Thursday, proponents of the directive failed to win a majority of votes in favour, but neither was there a majority to kill the proposal. As a result, the directive will be taken up by a committee of E.U. ministers in the coming months.
Key Canadian allies abstained on the vote, including Britain, France and the Netherlands – all home to multinational oil companies that have invested heavily in the oil sands.
The Harper government has been lobbying for two years to prevent the EU from targeting the oil sands due to its high emissions of greenhouse gases compared to conventional crude.
Under the fuel quality directive, E.U. refiners and marketers would be required to reduce the carbon-content of their overall fuel mix. The regulatory ascribed specific carbon-content levels to types of fuel, including bitumen from the oil sands.
Oil sands producers and governments in Alberta and Canada staunchly opposed the measure, fearing it would create a precedent for U.S. states considering similar measures, and impact on investment from international oil companies based in Europe.
Companies like Britain’s BP PLC, Royal Dutch Shell PLC of The Netherlands, and France’s Total SA, are expanding operations in the oil sands, but have faced shareholder resolutions urging them to disinvest.
Ottawa has threatened to challenge any fuel quality directive that punishes the oil sands and take the E.U. to the World Trade Organization.
Toronto trade lawyer Lawrence Herman, of Cassels Brock & Blackwell LLP, said Canada would have a strong case because WTO members are not allowed to discriminate against "like" products from different countries. And "like" is definite by the characteristic of the end product -- in this case, gasoline or diesel -- and not the process by which it is made.
Greenpeace said the E.U. ministers will now be held accountable if they allow Canadian lobbying to defeat a regulation that is meant to battle climate change and reduce emissions from Europe’s transportation fuels
