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Comment: Short-term economic issues distort EU climate policy

By John Parnell

EU Commissioner for climate action Connie Hedegaard welcomed the vote's outcome in the face of strong "lobbyism". (Source: EU Commission)

An EU vote over whether to classify tar sands oil as a “high polluting” fuel ended in stalemate today.

Ministers from the 27 member countries will now meet in June to debate the issue further.

This is viewed as a crucial debate as tar sands oil is more carbon intensive to extract and creates more pollutants when burned.

NASA climate scientist James Hansen said that exploiting Canada’s tar sands would mean “game over” for the climate and a surge to as much as 4°C of warming. Ultimately though, the debate is being driven by economic, not environmental issues.

The Fuel Quality Directive (FQD), to give it its Eurocratic title, would increase the amount of carbon attributed to tar sands oil to 107g of carbon per megajoule of energy that the fuel creates. The most common form of oil is rated at 87g per mega joule.

In real terms, this means that countries in the EU, where many industries are effectively taxed on the volume of carbon they use, would be landed with extra costs for using tar sands oil.

The result would effectively close the market to tar sands, not just from Canada, but also to smaller deposits in Estonia and several African countries.

“Lobbyism”

As well as facing opposition from the nations looking to exploit their reserves, many oil companies, including Shell, Total and Chevron have also raised their objections to the law.

At modern oil prices, the Candian tar sands are worth $15.7 trillion.

“With all the lobbyism against the Commission proposal, I feared that Member States’ experts would have rejected the proposal in today’s experts committee,” said Connie Hedegaard, EU Commissioner for Climate Action.

“I am glad that this was not the case. Now our proposal will go to Ministers and I hope governments will realise that unconventional fuels – of course – need to account for their considerably higher emissions through separate values,” added Hedegaard.

The vote ended with 89 in favour, 128 against and 128 abstentions.

The abstentions included the UK, which was expected to vote against the law at one stage, given its links to Shell.

UK student activist group People and Planet told RTCC it was pleased with the progress made on the debate.

“While we are disappointed that the EU was not able to come to a unified position on giving tar sands the label that science has demonstrated it deserves, the abstentions by the UK and other key countries shows that the campaigning that so many of us have been doing, has made it impossible for governments to parrot the lines of the Canadian government and the oil industry, without serious political blowback.”

The number of abstentions clearly indicates a level of unease over the issue.

The short-term economic benefits of flooding the markets with tar sand oils are however, compelling – especially given the volatile nature of oil markets and potential for conflict in the Middle East.

The day before the vote, the American Petroleum Institute’s chief economist John Felmy talked of a direct link between falling prices at the pump and the development of tar sands oil. A vote winner for sure.

Trouble in the air

On the EU’s other frontline debate this week, aviation carbon trading, it is the economic issues that again form the backbone of those looking to block the system.

Airlines from China, Russia, the US and more are unhappy about being pulled into the EU scheme, accusing Brussels of unilateralism.

The goal of the scheme is not to raise funds from overseas airlines, it applies to all including European carriers. The aim of the scheme is environmental. The financial gains are small.

A recent study by the Environmental Defence Fund found that many airlines are adding surcharges that more than cover the carbon costs, leaving them with additional profits.

The economy is all too often used as an excuse in climate change and energy debates.

This is unlikely to change until there is wider acceptance that climate change is an economic, opportunity not a threat.

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