Nuša Urbančič is the clean fuels manager of the green think tank Transport and Environment.
Last week, 21 Nobel peace and science laureates wrote to the European Commission urging them to immediately implement a law that recognises the higher greenhouse gas emissions of processing unconventional fuels such as tar sands. The urgency is because the Commission is delaying the publication of a proposal on how the EU will give different carbon ‘intensity’ values to dirtier fuels. This comes at a time when the IPCC has made it clear that we are responsible for climate change and that our carbon budget is limited.
Even the usually conservative International Energy Agency said some time ago that we have to leave two-thirds of fossil fuels in the ground to keep the world’s temperature rise below the agreed 2 degrees Celsius. Tellingly, the letter to the Commission was written not only by acclaimed chemists and physicists, but also by those who have dedicated their lives to global peace and equality. They understand that climate change is the biggest risk to lasting peace on this planet and their calls for immediate action could not be any louder.
Civil society is asking for this law, the Fuel Quality Directive (FQD), to both apply carbon intensity values and require company-specific reporting of the lifecycle carbon intensity for all types of unconventional fuels. This, in combination with a 6% decarbonisation target by 2020, will send an important investment signal to investors that Europe is serious about the carbon content of its transport energy.
In real terms this means that companies will take carbon into account with their investment decisions because if they import dirtier oil, they will have to do more to meet the 6% carbon reduction target. Instead of digging up more tar sands, companies will have a clear financial incentive to invest in lower carbon fuels and cleaner technologies. The impact on investments from such a proposal will be equal to removing 7 million cars from Europe’s roads.
The argument against classifying oil based on their carbon intensity – one persistently used by tar sands producers like Alberta – is that the oil will just be produced and sold elsewhere. One wonders why these provinces and states are lobbying so ferociously against EU environmental laws if this were really the case, which it clearly isn’t. The simple answer is that Europe is a premium market for energy and any decisions made here affect global markets.
All signs point towards a growing interest in importing more tar sands-based fuels to Europe. While Europe does not have the right kind of refineries for tar sands fuels, it is becoming increasingly clear that many refineries in the Gulf of Mexico are interested in exporting diesel produced from tar sands to the old continent, where the share of diesel consumption is growing. The latest lobbying by the leading US trade negotiator, Michael Froman, just confirms how real this threat is. The threat will only increase if Keystone XL and other oil pipelines are approved.
At the same time that Europe is regulating carmakers to make more fuel-efficient cars, we should ensure that our fuels are not getting dirtier. Europe is the second largest market for oil and, as mentioned, is a premium buyer. A majority of the oil companies investing in tar sands are European, so European decisions will have a very big role to play. Regulating what fuels can be sold in Europe based on their carbon footprint is grounded in similar logic to regulating what fridges or cars can be sold based on their energy or fuel efficiency. And Europe has a lot of market power: we often see our regulation being copied by other countries in the world.
The FQD also falls in the framework of unburnable carbon – a phrase that recently got some media attention. This means that companies are not taking climate policies into consideration when making investments that might become long-term liabilities once carbon prices go up. If investors are not taking climate risk into account, is it not the moral responsibility of regulators? The science is crystal clear and there is no excuse for inaction.
Crucial decisions about the future of our planet are being made by today’s politicians and Europe has a historic responsibility. We are the world’s biggest economy, known for our leadership in both setting standards and on climate change. But Europe cannot be seen as credible if it falters in addressing the dirtiest fuels on the planet, after fierce lobbying by the national and regional governments of Canada, the US, and the oil industry. The proposal was expected before last summer, but even now there is no sign from the Commission that things are moving forward.
In times of a crisis, Europe needs politicians with vision who are able to look ahead without being distracted by today's short-term issues and plan solutions for future generations. This is the only way to build a sustainable future for our children and grandchildren.