FQD 101: the myths

The arguments used by the oil industry and Canada are largely hot air. Below we counter the main ones.

MYTH – Tar sands are only a tiny contributor to climate change, and labelling them as dirty in the FQD wouldn’t make any impact

FACT – Many opponents to the FQD argue that the differentiation between low-carbon fuels and high-carbon fuels will just result in reshuffling and therefore won’t have any impact on in global GHG emissions. But a study commissioned by Transport and Environment shows that proper implementation of the FQD could save emissions of up to 19 million tonnes of CO2 every year – equivalent to taking 7 million cars off the roads, due to reduced investment in tar sands projects.

Under the FQD low-carbon fuels would bring oil companies closer to meeting their 6% target, so these fuels would be more profitable on the market, while high carbon fuels would make the achievement of the target more difficult and would be less profitable. Fuel suppliers would therefore be incentivised to invest in low-carbon fuels and disicentivised to invest in high carbon fuels – and this would have a significant positive impact on the market overall.

Moreover, the FQD could have a ripple effect, giving other potential markets for Canadian tar sands, such US states, the confidence to adopt similar legislation. In the longer term, if Canadian tar sands starts to look like a bad investment, this could stop emerging tar sands developments in places like Trinidad and Tobago, Congo Brazzaville and Madagascar, from taking off at all.

MYTH – The FQD discriminates unfairly against Canada

FACT – The Canadians have argued that the EU is unfairly singling out the tar sands, and indeed is unfairly targeting Canada. Neither of these accusations are accurate, and threats of WTO action have been shrugged off by the Commission. This is because the FQD addresses greenhouse gas (GHG) emissions from all types of transport fuels, including biofuels and electricity. The proposed FQD measures give default values to all unconventional fuels and tar sands are one of them. The FQD proposal treats all the tar sands the same, regardless of whether they are produced in Canada, Madagascar, or any other country in the world. The same is the case for oil shale, coal-to-liquid or gas-to-liquid, which get separate values regardless of where they are produced.

Tar sands-derived fuel is given a higher average carbon intensity than conventional oil because it is a fundamentally different product. Tar sands oil is produced from natural bitumen, a different ‘feedstock’ to conventional crude. Bitumen is a mixture of sand, water and around 11% oil. Bitumen is too thick to be pumped and has to be mined or extracted by injecting steam into the ground. Producing petrol and diesel from this feedstock requires much more energy than producing it from conventional crude oil, which means the carbon intensity of the final product is significantly higher. In terms of average carbon footprint from extraction and processing, the only overlap is between the very worse conventional oil (produced with very high levels of flaring) and the lowest-carbon tar sands projects.

MYTH – Some conventional oil sources are more polluting than tar sands, so the label is unfair

FACT – A key Canadian and UK government argument is that the FQD should further distinguish between conventional sources of crude. While it is important to take into account the higher emissions of some conventional oil sources, such as Nigerian crude, this argument is having the effect of delaying implementation to the point where the whole process could collapse.

At the moment, the main differentiation in the FQD is between carbon intensity values for different feedstocks. This is based on sound science, is ready to be implemented and will have a positive impact on global GHG reduction. Once this basic implementation approach has been approved, the methodology can be refined to differentiate further between GHG intensities of different conventional crudes – for example oil produced with flaring. Our recommendation is that the UK government supports the basic methodology of a feedstock approach and advocates for a review clause to further differentiate between conventional crudes in the next phase of the FQD’s implementation.

MYTH – The science isn’t sound

FACT – The default value for tar sands of 107g CO2/MJ proposed in the Fuel Quality Directive is based on the industry average for tar sands diesel that can be processed in EU refineries. The figure comes from a peer-reviewed study by Professor Adam Brandt from Stanford University for the European Commission. The study found that tar sands-derived fuel is on average 23% more GHG intensive than conventional crude currently used in the EU. In reality, this figure is conservative: a recent NRDC review of 13 scientific studies found tar sands fuels to be 18 to 49% more GHG intensive than the proposed EU default value for conventional oil. Even the Alberta government’s own study, commissioned from Jacobs Engineering Group, found that, in line with the Brandt study findings, tar sands oil is 12% worse than the dirtiest conventional oil refined in Europe and therefore much worse than the EU average.

It is important to note that the proposed tar sands value is also based on the average carbon intensity of current production. Better tar sands projects will be able to show that they have lower emissions. This encourages and rewards research and innovation that would reduce the carbon intensity of tar sands projects.

MYTH – Tar sands can be extracted sustainably

FACT – The Canadian government has claimed that tar sands extraction is becoming less carbon-intensive as the industry develops. While some gains in carbon efficiency were made in the early years of the industry, the trend has stalled in recent years. In large part this has been due to the shift from open-pit mining to in situ production, which requires more energy, uses more fresh water, and produces more greenhouse gas emissions than mining. In situ production still disturbs the local environment, destroys habitats of wildlife and impinges on Indigenous communities’ subsistence lifestyles.

Even if further reductions can be made in carbon intensity per barrel of oil produced, these modest improvements would be massively undermined by the projected growth of absolute emissions, as the industry rapidly expands. Overall emissions have been steadily rising and are likely to double again between 2010 and 2020.

The Canadian government promotes Carbon Capture and Storage as a way to create a long term sustainability in the tar sands industry. However, the technology is still in its infancy, and is prohibitively expensive. It is also unclear how useful the technology would be, given CO2 streams are relatively small and diluted, and facilities are scattered over thousands of square kilometres rather than concentrated in one place. Even the most optimistic industry estimates have suggested that overall reductions from upstream operations could be in the 10 – 30% range at the best locations by 2020, and 30 – 50% by 2050, whereas reductions of around 85% would be required to make tar sands emissions comparable with the average for conventional oil production. Crucially, emissions must be reduced now, and the time lag before CCS would be rolled out even to this modest scale makes it an unworkable solution.

Leading climate scientist James Hansen has warned us that if tar sands extraction is allowed to continue unabated as planned, it will be ‘game over’ for the climate, as the amount of carbon locked up in what is the third largest oil reserve on earth is enough to make it impossible for us to keep global temperatures below 2ºC.

In short, tar sands are not a viable form of energy for the future, and should not be encouraged to expand into new markets. Any overall improvements in the sustainability of the tar sands industry could only come from reducing the size of the industry rather than expanding it. With a tar sands value in the FQD, the EU will send a strong message that putting tar sands fuel into the world’s future energy mix is unpopular, unnecessary and dangerous.

 

Thank you to Transport and Environment for a lot of the information in this section.

 

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