Its been a bad week for Canada’s tar sands industry.
In the same week that US President Obama dealt a blow to the Keystone XL pipeline, Europe’s landmark directive – aimed at banning tar sands oil from the continent – looks as if it could face a reprieve.
As the European Commission detailed its plans for a cross-continent Energy Union this week, the EU’s vice president for energy union, Maroš Šefčovič excited environmentalists when he suggested the Fuel Quality Directive (FQD) – aimed at encouraging greener road fuels – might not be scrapped at the end of the decade as had been previously thought.
Asked whether the FQD could see a reprieve Šefčovič, told the Guardian:
My first reaction is yes. We just have to adjust it to all the lessons learned from biofuels, and all the [other] lessons learned from the previous time.
Around 15% of Europe’s carbon emissions come from road transport, and it is currently the only sector in which emissions are still rising.
The FQD aims mandates a 6% reduction in the greenhouse gas intensity of fossil fuels by 2020.
The measures are intended to price dirty tar sands out of the European market.
Yet the FDQ has never been fully implemented as the EU has so far failed to set out accurate carbon labelling for fuels, including the tar sands.
More worryingly, earlier this year the European Commission appeared to have caved into the intense lobbying efforts of oil companies and the Canadian government by using its proposals on the EU’s 2030 climate and energy policies to quietly scrap the FQD from 2020.
It said it did “not think it appropriate” to establish new greenhouse gas intensity targets for transport fuels after 2020.
However, this position seems to have changed under the new Commission, a move welcomed by campaigners.
Colin Roche, a campaigner at Friends of the Earth Europe said:
It’s vital the Commission tackles Europe’s transport emissions, which will be the largest source of emissions by 2030. What’s absolutely crucial now is that any renewal of the fuel quality directive is a real deterrent to European imports of climate-killing tars sands and damaging crop-based biofuels. Europe cannot afford to ignore this black hole in their climate strategy.
The move is the latest blow to Canada’s tar sands industry.
Earlier this week, US President Barack Obama vetoed a bill aimed at forcing the construction of the Keystone XL pipeline, aimed at connecting Canada’s tar sands with refineries along the Gulf Coast.
The pipeline would give the floundering tar sands industry a shot in the arm.
Together these two latest blows cast doubts whether tar sands oil could be exported outside of Canada, chopping off the industries major supply routes.
In another blow to the industry, Shell also announced this week that it would be shelving its plans for a major new tar sands mine in Canada, the largest project yet to fall victim to low oil prices.
The company has withdrawn its application for the 200,000-barrel-per-day Pierre River project. It follows others, including Total, Statoil and Cenovus Energy, who have all recently postponed big oil sands projects.
The Canadian tar sands is one of the world’s highest-cost production regions.
Their extraction is highly controversial because of the high-carbon footprint of oil sands compared to conventional crude – releasing around 17% more carbon pollution.
It is now widely understood that two-thirds of all known fossil fuel reserves must be left unburned if the world is to remain below the internationally agreed 2C warming threshold, above which scientists warn climate change would become unmanageable.
A study in January found that virtually all tar sands exploitation was incompatible with this 2C limit.