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The proposed Fuel Quality Directive (FQD) aims to reduce the European Union’s (EU) greenhouse gas emissions from fuel by 6 percent by 2020, compared to 2010 levels. The FQD implementing measures classify crude oils into three main categories — “conventional”, “oil shale” and “oil sands natural bitumen” — and assign a greenhouse gas (GHG) emissions intensity value to each.
The FQD groups almost all crudes currently used in the EU in the “conventional” category, regardless of GHG intensity and arbitrarily places Canadian oil sands into a separate stand-alone category with a higher, discriminatory GHG intensity value.
These two categories are completely arbitrary, since oil sands have GHG emissions that are similar to — or in some instances even lower than — those of many other crude oils currently consumed in the EU, such as some heavy and light crudes with significant flaring and venting produced in countries such as Venezuela, Iraq, Nigeria and Russia.
By singling out the oil sands and arbitrarily assigning a higher GHG emissions value, the FQD would discriminate against Canada by discouraging EU refiners and consumers from using Canadian crude oil and products, thereby negatively impacting Canada’s energy sector and disadvantaging European industry.
Canada fully supports the goal of lowering global GHG emissions of transportation fuels. In order for Canada to play a constructive role in helping the European Union achieve its goals, the FQD must be fundamentally revised. The FQD, as currently drafted, is fundamentally flawed and would not meet its environmental objective. Indeed, it could actually lead to greater global emissions by increasing the distance crude oils need be transported in order to reach other markets. It discriminates against Canadian oil sands, is not science-based and is not transparent. The way forward on energy supply and environmental protection in the EU is to work together on implementation measures that are based on objective science, fair to everyone, transparent and without double standards.
NEW INDEPENDENT REPORT
To support this goal, the Government of Canada contracted ICF International to conduct an Independent Assessment of the European Commission’s Fuel Quality Directive’s “Conventional” Default Value.
ICF International, a reputable consultancy with experience in the field of greenhouse gas life-cycle analysis, acted as an expert consultant on the EU’s own Impact Assessment of proposed implementing measures for the Fuel Quality Directive.
By taking into account the results of this important independent study, the EU could reform its measures to ensure a reduction in emissions in a way that is transparent and based on sound science. In this framework, Canada can fulfil its goal to do its part as a responsible, reliable energy supplier to the world.
Some of the report’s key findings include:
There is no scientific evidence to support the current differentiation between “conventional” and “oil sands natural bitumen” crude oils in the FQD implementing measures.
- GHG intensities of conventional crude oils fall on a continuum, not just one value.
- Some light and heavy conventional crudes have GHG intensities that are similar to or even higher than those of oil sands crude.
- The FQD implementing measures should, therefore, evaluate the GHG intensity of each crude oil individually, according to their range of GHG intensities.
The FQD “conventional” default value is based on obsolete data and has significant flaws in the methodology
- The data underlying the FQD has flaws such as relying on voluntary rather than mandatory reporting; having limited coverage; not representing the GHG intensity of current operations; and, using data that is out of date.
The FQD does not account for the range of carbon intensities of conventional crude oil and products consumed in the EU.
- In comparison with the draft FQD default values of 89.1 (diesel) and 87.5 (gasoline) g CO2e/MJ (grams of CO2 equivalent per megajoule), ICF International estimates that the GHG weighted average intensity of a barrel of conventional crude used in the EU falls between 86.0–97.4 (diesel) and 86.2–97.6 (gasoline).
The FQD default value for conventional crude could be much higher than its current level.
- The ranges proposed by ICF International indicate that the weighted average for the European fuel supply could be up to roughly 10 percent higher than their existing default values (9.3 percent for diesel and 11.5 percent gasoline).
- This would place the proposed oil sands default value roughly 10 percent higher than the top of the range of emissions of the “conventional” fuel category (as opposed to 22 percent in the current proposal).
The FQD default value likely underestimates flaring emissions.
- Underestimating flaring and venting is important, particularly given the high volumes of venting and flaring from some key EU suppliers.
- Ranges of uncertainty in the potential flaring efficiencies (90–98 percent) for countries with significant flaring emissions suggest that the reported GHG intensities for these countries could be 3–7 g CO2e/MJ crude higher than estimated by the JEC (a consortium of the European Commission Joint Research Centre, the European Council for Automotive Research and Development and the Conservation of Clean Air and Water in Europe).
- Differences of as a little as 3–4 g CO2e/MJ means that the FQD could miss 50–75 percent of its GHG reduction target.
The current FQD could therefore actually increase GHG emissions, instead of reducing them.
- According to ICF International, by not distinguishing between the GHG intensities of conventional crudes, the proposed FQD could result in shifts towards high-intensity crudes, which could increase actual GHG emissions, instead of reducing them.
As currently proposed, the FQD “conventional” oil category assigns a low GHG emissions value to some oil producers who have the same or potentially higher emissions than those of oil sands crude. This approach not only discriminates against oil sands crude but also could shift the demand to countries with high-emitting crudes and weak environmental regulations. The FQD implementing measures, therefore, also discourage transparency and reward countries with poor environmental policies.
Furthermore, the fact that the “conventional” default value could be roughly 10 percent higher than its current level casts significant doubt on the rigour and effectiveness of the FQD implementing measures as designed.
ICF International recommends that the FQD implementing measures’ “conventional” oil category could be made more accurate by evaluating the greenhouse gas emissions of each crude oil individually. The most recent public, transparent, verifiable and reproducible data and models should be used to determine individual crude oil emissions.
The complete study can be found here:
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