NCPA - National Center for Policy Analysis

Why Europe Is Wrong about Canada's Oil Sands

March 20, 2012

The European Commission was wrong when, this past fall, it singled out oil extracted from Canada's "tar sands" by proposing a higher carbon emissions value for it than for other sources of fossil fuel.  On the actual proposed action, the directive would rank oil sands crude as having a greenhouse gas (GHG) value of 107 grams of carbon per megajoule.  That would be higher than the measurement applied to conventional oil entering Europe, which has an 87.5-gram impact value applied, says Mark Milke, director of Alberta Policy Studies at the Fraser Institute.

  • According to a study by IHS Cambridge Energy Research (IHS-CERA), oil derived from sand -- like Canada's -- emits as much GHG emissions as Nigerian or Venezuelan crude oil, but only 6 percent more than the average crude oil consumed in the United States.
  • Other studies that calculate the gap in GHG emissions between oil sands crudes and other sources of oil have found higher emissions; this is because they only compare GHG emissions for part of the life cycle rather than the total and more comprehensive "well-to-wheels" emissions, which accounts for environmental impacts associated with all the stages of a product's life from extraction through to processing, manufacturing, distribution and use.
  • This overall 6 percent difference is rendered less significant still by the fact that most emissions come not during extraction but during usage.

Set against these differences in emissions are three considerations on energy that should also be considered: demand, security and human rights.

  • Global demand for oil will rise from 89.2 million barrels per day now to 99 million barrels in 2035, according to the International Energy Agency, and unconventional oil -- such as Canada's oil sands -- will play "an increasingly important role in world oil supply through to 2035."
  • In addition, oil's origin should matter for Europeans who care about their own security and about others' human rights; for example, in Freedom House's annual Freedom in the World survey, 10 of the world's top 15 oil-exporting countries are considered "not free," three are considered "partly free," while only two -- Norway and Canada -- are considered "free."
  • Lastly, Canada's prime minister and his government have hinted quite clearly that Canada may complain to the World Trade Organization if Canadian oil sands are labeled "dirty," arguing that the designation is protectionism under another guise.

Source: Mark Milke, "Why Europe Is Wrong about Canada's Oil Sands," Fraser Institute, January/February 2012.

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