The tar sands mystery and the smoking TTIP gun
The EU’s motivation for a proposal to scrap greenhouse gas intensity targets in its flagship Fuel Quality Directive (FQD), which regulates emissions from transport fuels, has been shrouded in mystery since it was first mooted three months ago, but EurActiv has uncovered new information.
Officials in different EU departments offer contrasting explanations for the abandonment of a policy to cut Europe’s transport fuel emissions by 6% by 2020, at a cost of many billions of euros, despite repeated calls for action.
Around a quarter of Europe’s greenhouse gas emissions come from transport – the only sector in which CO2 output is increasing – and that figure could rise to 40% of the total by 2020, according to the European Commission. Yet the death of the tar sands issue in Europe remains an enigma.
“It is really about burying a problematic file,” one EU source told EurActiv, noting North American opposition to mandatory fuel standards in ongoing trade negotiations. “Tar sands was the primary motivation, but killing it this way conveniently gets rid of the biofuels problem as well.”
A biofuels boost and tar sands curb are both covered by the FQD, and both policies are controversial. Environmentalists say that biofuels may increase CO2 emissions and world hunger. But the oil industry lobby, Canada and the US are concerned that tar sands may be unfairly discriminated against under the directive.
EU spokespeople will not talk about the issue on the record. But one official told EurActiv that the directive had been spiked to curb biofuels subsidies running at €6 billion a year, when the resulting emissions savings were “pretty questionable.”
“We need to meet ambitious climate targets in a smarter way at reduced cost and having lots of extra targets constrains how member states [do that] and has the potential to impose additional costs,” he said. “That’s why the sub-targets came under quite a lot of scrutiny."
But other EU experts point out that the sub-targets could have been amended to take account of the bad biofuels water, without throwing out the tar sands baby.
“You could have targets that don’t require an increase in first generation biofuels,” one source said simply. The problem was that existing policy was "essentially an agricultural subsidy by the backdoor,” he added.
“It cost an enormous amount of money for no benefit at all,” the source said. “The Commission realised that you could get rid of it and let people subsidise it as agricultural policy. That’s the realpolitik.”
But EurActiv understands that several commissioners also expressed fierce opposition to a 2011 report about tar sands for the EU by Stanford University’s Adam Brandt, which found that lifecycle emissions from tar sands were on average 22% higher than for conventional crude, due to carbon intensive production processes.
Some think this explains why a completed implementing act for the FQD has been put on ice for over three years, despite a stakeholder consultation that produced no substantive calls for scrapping the targets. They cite opposition from EU states with interests, such as the UK and the Netherlands.
But the Dutch parliament last year voted for the tar sands values to be adopted, while UK diplomats in Brussels say that Britain wanted the targets “amended rather than scrapped.”
When EurActiv asked the British energy minister Ed Davey in March if he supported scrapping the FQD’s greenhouse gas targets from 2020, he appeared unaware of the proposal.
“It is the Department of Transport’s brief and clearly we are discussing a lot of issues with them,” he said, “but we haven’t discussed that for a while because it is not part of the negotiations. It is not in this  package.”
For months, environmentalists have suspected that the demise of European action on tar sands was linked to negotiations on an EU-Canada free trade deal known as CETA, or an EU-US free trade deal, known as TTIP.
The smoking petroleum gun
The US is the only country to refine and export Canada’s tar sands petroleum to Europe - blended with domestic fuel in its export barrels - making it vulnerable to EU greenhouse gas intensity targets.
Additionally, a lot of the US’s new oil production comes from unconventional sources and could be vulnerable to the FQD in its own right.
“There are 20 or 30 diesel-refined fuels we export now to the EU that could be either restricted, reduced or completely cut off, depending on how this [FQD] is implemented,” one inside source told EurActiv. “We don’t have a final text yet so there’s nothing to react to but there’s a possibility of raising this as a trade problem.”
EurActiv understands that Canada pressured the US to act more firmly than it did, but that as long as no final FQD text was produced, the US stance was to hold fire. This may explain why the implementing FQD act has lain buried for so long.
If the FQD had been passed last year, as expected, Washington feared that a revision to the law in 2015 would have targeted its own unconventional exports, forcing it to mount a challenge under trade law that would have proved as environmentally contentious as the unresolved Keystone XL pipeline case.
The Commission’s decision to remove the targets also removes the possibility of a row between Western allies on the international scene as talks to agree a binding climate change agreement at the UN level are expected to conclude in Paris in December 2015.
But for EU officials, the reasoning behind scrapping the directive’s targets remains opaque.
“The only thing you can say about this proposal is it appeared out of a vacuum as there wasn’t any strong calls for it,” one EU official said. “I think the pressure came from the US and the fossil fuels industry. You should go right to see Catherine Day and ask her.”
Catherine Day, the secretary-general of the European Commission, has been widely credited with writing the passage in the 2030 proposal dealing with FQD greenhouse gas intensity targets.
She did not respond to telephone or email requests for an interview.
On 4 October 2011, the European Commission college voted on a review of the Fuel Quality Directive which assigns a default value 107 grams CO2 equivalent per megajoule (CO2eq/MJ) for oil produced from tar sands.
This figure is higher than the 87.5g CO2eq/MJ average assigned for other crude oils, because of the higher carbon intensity associated with the oil extraction process. The EU’s move led to protests from North America.
Last July, the US trade representative Michael Froman told a Congressional House Ways and Means Committee hearing that the FQD guidance on tar sands was “discriminatory, environmentally unjustified and could constitute a barrier to US-EU trade.”
“We continue to press the Commission to take the views of stakeholders, including US refiners under consideration as they finalise these amendments,” he said.
In March of this year, Dan Mullaney, the assistant US trade representative for Europe confirmed to EurActiv that: “we are [still] discussing the Fuel Quality Directive with the EU”.
EU documents seen by EurActiv in 2012 show that Canada too has “raised the issue in the context of EU-Canada negotiations on a free trade agreement.” Canada’s natural resources minister, Joe Oliver, also wrote to the EU’s energy commissioner, Günther Oettinger warning that the directive was “discriminatory and potentially violates the European Union’s international trade obligations.”
But the EU had appeared to stand firm in the face of such weighty gambits. As recently as a year ago, the EU’s climate action commissioner, Connie Hedegaard insisted that “trade must not be used as an excuse to prevent environment progress”