EU proposal allows unrestricted use of high-carbon crudes and fuels

9 October 2014

The European Commission released proposed implementing measures for the Fuel Quality Directive (98/70/EC). Under the proposed GHG intensity calculation, petrol and diesel fuels from high-carbon sources—including coal-to-liquid (CTL) technologies, oil sands or shale crudes—would be assigned the same GHG intensity as conventional crude. This would open the door for European energy suppliers to use and invest in the world’s unconventional, more energy intensive oil resources such as Canadian oil sands.

The Fuel Quality Directive (FQD), as amended in 2009, obliges suppliers to reduce by 6% the life cycle GHG intensity of fuel and other energy sources for use in road vehicles by 2020. However, the 2009 legislation did not specify methods to account for GHG emissions from different sources of crude oil or from electricity. As a result, the enacted target could only be met with biofuels.

The current proposal establishes a method for calculating the carbon intensity for different fuel types, including petrol, diesel, and natural gas (LPG and CNG). Each of these fuel types is assigned a default life-cycle GHG emission intensity value in gCO₂eq/MJ. Suppliers will have to use these values when reporting the carbon intensity of their fuel supply to Member States to ensure a 6% reduction in their transport emissions in 2020. The proposal also includes rules that encourage the use of electrical energy in transportation and introduces strengthened reporting requirements for fuel suppliers.

The adoption of the FQD implementing measures has been delayed by several years, largely over the issue of GHG emission ratings of oil sand crudes. The original Commission proposal included calculation methods based on GHG intensity factors that would penalize high-carbon crudes and fuels. That proposal—heavily opposed by Canada, who threatened to take this issue to the World Trade Organization if necessary—was rejected in 2012 by the European environment ministers.

The current proposal still lists GHG intensity values for various types of feedstocks and processes. For example, in the case of diesel fuel, conventional crude is rated at 95 gCO₂eq/MJ, natural bitumen (representative of most oil sand crudes) at 108.5, oil shale at 133.7, and CTL at 172. However, the GHG calculation no longer uses these values. Instead, a weighted GHG intensity value is used for all diesel (95.1 gCO₂eq/MJ) and petrol (93.3), regardless of the type of crude or process.

The environmental group Transport & Environment has criticized the proposal as a failure on the part of the EU, who yielded to the lobbying pressures from Canada, the United States and the oil industry.

To become law, the proposal must be approved by the European Council and by the European Parliament.

Source: European Commission