Energy Ink

Canada finds Eastern allies in fuel directive brouhaha

Estonia among the states balking at carbon-intensive label for oil sands

October 26, 2011

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Maybe Natural Resources Minister Joe Oliver’s lobbying effort to alter the European Union’s (EU) Fuel Quality Directive is having an effect.

We wrote last week that Oliver was wasting his time crossing the pond to convince the EU not to slap oil sands-derived fuels with a higher carbon emissions rating than other fuels. But now Oliver has found some allies in his battle, including Great Britain and, get this, Eastern European states like Estonia.

Britain’s siding with Canada on this issue isn’t hard to figure. North Sea oil production saved the British economy in late 1970s and 80s, so it may have a soft spot for a former colony with an economy increasingly dependent on petroleum. More importantly, BP has a stake in three oil sands ventures in Alberta and the Brits don’t want policies in place that could damage one of its highest-profile companies.

But why does Estonia, a little country bordering the Gulf of Finland and the Baltic Sea, care about what ranking the oil sands are given in this proposed directive? Well, it turns out Estonia has oil shale reserves, which are considered even more polluting than the oil sands. The Baltic state had been an economic success story among the former Soviet bloc nations that have joined the EU thanks to high growth rates and strong electronics and telecommunications sectors. But the recession of 2008-2009 hit Estonia hard (gross domestic product dropped 14 per cent in 2009) and the unemployment rate stands at around 17 per cent.

With industry increasingly turning to methods like hydraulic fracturing and horizontal drilling to coax more oil and gas out of tight rocks in North America, other regions with significant shale potential are looking to cash in on the bonanza. Estonia sees an economic opportunity here. It’s not about to have the EU muck it up without a fight.

Poland and Romania are some other Eastern European nations who probably are not thrilled with the current language of the EU’s fuel directive. Poland has become a place of interest to the oil and gas industry because of its shale gas potential. Granted, natural gas doesn’t produce the emissions the oil sands does, but the Poles could be worried that passing the fuel directive as is will encourage future attacks on other unconventional sectors – like shale gas.

As for Romania, the oil and gas industry has a long history in the land of Count Dracula. The country is also keen to encourage foreign investment to produce proven oil reserves of 1.4 billion barrels – some of it uncoventional oil. But if the EU directive scares off investors, that could harm one of the continent’s weaker economies.

It seems doubtful the objections of small EU players like Estonia, and even a big player like Great Britain, will save the oil sands from being saddled with a dirty label. But at least Joe Oliver knows some European nations have his back.

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Comments

  • Colin

    No, you had it right in your previous article, Joe Oliver is a joke in the capitals of Europe and his denial of the science and empty threats of WTO action (there is no discrimination) has not been taken seriously. As you reported, his ham fisted attempts at lobbying just make Canada look like a climate change Neanderthal. It is no coincidence that the UK is supporting Canada just as it opens a consulate in Suncor’s offices in Calgary – they want a slice of the action. And as you go on to report eastern block countries in the EU have their own high carbon fossil fuel interests. Joe Oliver deserves no credit for this, he couldn’t even field basic questions from under-grads at the LSE, had to cut his talk short and cancel a press engagement afterwards in case his misinformation was challenged. Send him over to Europe again before the December member state vote, he may annoy a few of those states opposing the directive enough for them to change their mind – nobody appreciates being lied to and taken for a fool.

    • Darren Campbell

      Colin:

      Someone is fired up about Joe Oliver. Also, my opening sentence about his lobbying efforts bearing fruit was tongue-in-cheek, although that’s difficult to make clear in a written post.

      But I agree that Oliver’s efforts are not what has Estonia and Great Britain siding with Canada here. They’re doing it for self-serving reasons, just like any other state.

      Thanks for the comment.

      Darren