Canada in tar sands trade spat with EU

The EU looks likely to encounter more problems with its climate change efforts as Canada becomes the latest country to threaten a trade war over proposals on the import of fuel derived from tar sands.

Canada has threatened to push its case, even at the World Trade Organisation (WTO), to challenge the EU's intention to single out tar sand fuel, acknowledged as one of the most polluting, carbon-intensive forms of energy production, by labelling it 'highly polluting' against a standard measure.

Although virtually none of Canada's tar sands exports go to Europe, the country fears the EU proposals would set a global precedent that would limit its ability to exploit what are thought to be the world's third-largest oil reserves.

Canada's natural resources minister Joe Oliver said: "We don't want to have our oil stigmatised so it can impact on our ability to sell."

Canada's ambassador to the EU, David Plunkett, went further in a letter to a European Commissioner, obtained by Friends of the Earth: "If the final measures single out oil sands crude in a discriminatory, arbitrary or unscientific way, or are otherwise inconsistent with the EU's international trade obligations ... Canada will explore every avenue at its disposal to defend its interests, including at the WTO."

A recent EU vote was inconclusive, and the issue awaits a decision by EU environment ministers in June, after which the proposals could go to a ratifying vote at the European Parliament. The UK abstained in the initial vote.

The incident is the second threat of a trade war in response to EU climate change policies. Chief among them is China, which banned its carriers from paying the recently-announced EU emissions levy on airlines (EP, March 2012, p6).