Inside Politics

Sorting out the spat over Europe's fuel quality directive

So Wednesday, I wrote this article about Joe Oliver's excellent energy adventure in Kuwait.

The International Energy Forum is a supplier-buyer gabfest. A chance for energy ministers the world over to get together, talk business, peer into crystal balls and iron out differences.

Canada's Minister of Rocks, Trees and Oilsands was doing all three, but the main focus of my story was on the last one. Oliver spent a lot of his time twisting European ears and threatening them with stern letters over the unfairness of their proposed new Fuel Quality Directive (FQD).

So what is this thing that has our government so flustered they send Oliver all the way to Kuwait to bug a bunch of Eurocrats?

Well, see, unlike Canada, the European Union is part of the Kyoto Protocol. As part of their commitment to lowering the amount of greenhouse gas they pump into the atmosphere, our Euro-buddies are aiming to reduce carbon emissions from transportation (read: planes, trains and automobiles) by 20 per cent. To hit that target, fuel suppliers might (I say "might" because the FQD isn't law yet) have "to reduce by six per cent the life-cycle greenhouse gas intensity" of the fuel they supply.

Intensity targets -- basically, reducing the amount of GHG pollution per unit of energy.

The way our continental cousins have chosen to calculate that pollution is by using a formula called "well-to-wheel."

How does it work?

You add up all the energy that goes into getting the stuff out of the ground, shipping it, refining it and then actually burning it in your car during your trip to the bar to calm your nerves after doing all that math, average it out and you come up with a number that represents the grams of carbon dioxide belched per megajoule of energy burnt.

It looks like this: x gCO2/MJ.

Strangely, the Europeans decided to cut down on the bureaucracy of calculating this value.

How? Let me explain.

Each well or mine you dig to get oil, coal, natural gas or bitumen is distinct and different in the amount of effort you have to exert to get at said product. The more effort needed, the more GHGs created.

And, to a certain extent, each hole yields a distinct and different grade of fuel that varies in the amount of energy you need to refine it into something that will fly a plane or get your beater down to the beer store. The more energy used, the more GHGs created.

So rather than force suppliers to make a calculation for the product extracted from each and every one of the tens of thousands of holes dug in the world, the Euro-bots came up with an average value based on the fuel source.

They broke the fuel sources down into 12 categories and assigned each a default value that represented gCO2/MJ.

Here are four:

  • Conventional Oil = 87.5
  • Natural Bitumen (oilsands) = 107
  • Oil Shale = 131
  • Coal = 190
Because oilsands take a lot more energy to both get out of the ground and refine than conventional oil, the Europeans assigned it a higher value than conventional oil but a lower value than shale oil (because it's easier to dig sand than bust rocks).

What that means is, if Europe wants to hit its GHG targets it will have an easier time doing it with light sweet Saudi Arabian pancake syrup than with gritty Alberta bog bottoms.

And this... this is where Ottawa starts to freak out! But not because the Europeans are pointing out the obvious.

No. What really gets Ottawa is the perceived discrimination on Europe's part. They favour the dirty oil they do import over the dirty oil they don't.

"Russian oil, it may be light crude but it involves flaring. That is to say burning (off) gas, which they could in theory have transported but they don't. The result being that our understanding is that their emissions are the same or perhaps higher than Canada's," Oliver told me Wednesday in a teleconference.

Europe gets about a third of its oil from Russia and less than one-tenth of one per cent from Canada. Russia gets the lower, conventional oil value to Canada's higher natural bitumen value. And the Russians escape the Euro-smear the Albertans get.

That's a fair point.

But all the Canadian argument means is that Russian conventional oil emits just as many GHGs as Alberta bitumen.

In the end, it seems this whole exercise is about the reputation of Fort Mac Greasy Grit, because Europe barely buys any of our product. We're way more interested in selling to Asia. And according to Oliver, they don't care about the FQD.

So, two questions about this strategy:

If Canada's whole defence comes down to, "Russian oil is just as dirty as ours"... How does that make Alberta bitumen look better?

And if it doesn't ... why are we bothering?
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