ARCHIVED - Minister Oliver's letter on Canada's position on the FQD to Günther Oettinger, European Commissioner for Energy of the European Union

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March 13, 2012

Mr. Günther Oettinger
European Commissioner for Energy
B-1049 Brussels

Dear Commissioner Oettinger,

I would like to draw to your attention Canada’s views on the European Commission’s proposed Fuel Quality Directive (FQD) implementing measure and share with you factual information on the problems with the proposed measure.

Canada supports the goal of reducing GHG emissions and does not object to the principle of a low carbon fuel standard for transportation fuels.  We remain strongly opposed to the Commission’s proposed measure which differentiates unfairly oil sands crude from all other sources of crude oil.  Any proposed implementing measure that provides separate, more onerous treatment for oil sands derived crude oil relative to other crude oils with similar or higher GHG emissions intensities is discriminatory, and potentially violates the European Union’s international trade obligations.

Oil sands crude is a heavy crude oil with GHG emissions and chemical properties similar to other heavy crudes found and produced throughout the world and currently consumed in the European Union. Treating oil sands crude oil differently from other crude oil, based on anything other than their actual GHG emissions intensity, works counter to the FQD’s stated goal of reducing the GHG emissions in fuels consumed in the European Union.

The credibility of the FQD depends on the quality and reliability of its data on GHG emissions.  Not all countries provide the same quality of data and transparency, and some provide no information at all.  Some of the crude oils produced by these countries have similar or higher GHG intensity than oil sands crude, but they do not report it.  The Commission’s proposal rewards them for their lack of reporting by having their crude oil categorized in the lowest GHG category.  As drafted, therefore, the Commission’s proposed measure penalises countries such as Canada that require transparent, independently verifiable data. Furthermore, it discourages less forthcoming countries from providing better data or becoming more transparent, and gives them an incentive to never report actual GHGs.  

We understand that the European Commission usually carries out a full impact assessment for any new measure in order to consider all of the implications before bringing it forward.  However, there has been no assessment of the impact of this proposal on the petroleum and refining industries, broader impacts and cost implications on economies and consumers. We are unaware of any assessment of the proposal’s effectiveness at reducing GHGs in the European Union and the impact on the economy, an important undertaking that should be completed before the proposal is considered.   

Holding the third largest proven reserves in the world, Canada is a stable, reliable, democratic and environmentally responsible supplier of oil to the global market.  Any policies that impede the free-flow of global oil supplies like Canada’s are detrimental to the European Union’s energy security.

Finally, I would note that the European Union’s own committee of technical experts, the EU Fuel Quality Comitology Committee, who are experts on the oil and refining industries, voiced similar concerns at their recent meetings. When put to a vote, only 89 votes were cast in support of the proposal, with 128 votes against, and a further 128 abstentions, largely due, we understand, to their serious concerns with this measure as currently drafted.  

The Commission should not disregard or delay addressing these flaws in the proposal, nor should it act on incomplete information.  It is unacceptable that the Commission would recommend to European Union Member States that they defer addressing some of these defects until 2015. 

Canada believes that the proposed implementing measure is discriminatory and works against the FQD’s policy goals.  We would urge you to insist that the Commission propose an effective implementing measure for the FQD, one which properly assesses the GHG intensity of all sources of crude oils used in the European Union.

 

Yours sincerely,

 

 

Joe Oliver
Minister of Natural Resources