Tar sand row threatens Canada-EU trade deal -sources

Mon Feb 21, 2011 12:48pm GMT
 

BRUSSELS Feb 21 (Reuters) - Canada has threatened to scrap a trade deal with the European Union if the EU persists with plans that would block imports of Canada's highly polluting tar sands, according to documents and sources.

The European Union has already told its fuel suppliers to reduce the carbon footprint of fuels by 6 percent over the next decade, and is now fine-tuning "default values" to help suppliers identify the most carbon-intensive imports.

Canada says the standards would instantly constrict a possible future market for its oil sands -- tar-like oil that is trapped in sediment and forms the world's second-largest proven crude reserves after those of Saudi Arabia.

"Canada has been lobbying the Commission and member states intensively to avoid a separate default value for fuel derived from tar sands," said a briefing note prepared by EU officials for climate commissioner Connie Hedegaard.

"It has raised the issue in the context of EU-Canada negotiations on a Free Trade Agreement," adds the note, one of several from last year released last week under freedom-of-information laws.

Sources said on Monday Canada had gone further, threatening to scrap the free trade deal, which is expected to be agreed later this year.

There was no immediate comment from the Canadian embassy in Brussels.

Tar sands have a particularly high carbon footprint due to the large amounts of energy used to separate them from the sand.

Market Update

  • Africa
  • US
  • Europe
  • Asia
UK £ USD =1.6481
Euro USD =1.3126
Rand USD =0.0932