Environmentalists said that improves the plan's chances of making it into law, while Canadian government and industry officials said the vote results tell them which politicians they need to convince to finally defeat it.
"It's a somewhat different fight, but our fundamental argument is the same," said federal Natural Resources Minister Joe Oliver.
"The purpose of all this is to reduce greenhouse gas emissions. If you slam a country whose oil you do not import, but give a free pass to oil that you do import, then you have achieved nothing. You maybe feel better, but you've achieved zero."
Alberta Premier Alison Redford said the vote breakdown gives the province valuable information on which countries agree with its message and which ones still have questions.
"There will be politicians that have concerns, that will be looking for very particular information," she said. "And we're going to take the time to make sure that we're having those detailed discussions.
"It will be a continuation but also a concentration of our efforts."
Keith Stewart of Greenpeace said Thursday's vote was good news.
"We're pretty optimistic about it," he said.
"If we were going to lose it, we would expect to lose it at a committee of faceless technocrats rather than when government ministers have to own the decision. If they want to stand up and say they sided with Shell and BP instead of the climate, then that's going to be a pretty uncomfortable position to take in Europe."
Oliver acknowledged the oilsands are not popular in Europe. But he said the government will point to recent research suggesting that, overall, massive hydrocarbon stores of coal and natural gas are much more of a climate threat than any kind of oil.
"If we can get the facts out in a convincing way to people, I think this can change the public's mind. I think that most recent study ... is going to be very helpful."
The EU's Fuel Quality Directive classifies feedstocks used to create transportation fuel by the amount of greenhouse gas they create. It has only two classifications for oil: conventional crude and natural bitumen, which would include the oilsands.
The classifications would be used to encourage greater use of low-carbon feedstocks.
An EU committee voted 128-89 against the directive. There were 128 abstentions. The committee needed 255 votes to either approve or reject the proposal.
The abstainers included Germany, the United Kingdom, France and Holland. The last three are all home to energy multinationals with major interests in the oilsands.
The proposal now goes to the Council of Europe, which is a ministerial-level group of politicians from the EU's 27 member countries. The council is expected to rule on the issue in June.
The Canadian government and industry say the problem with the proposal is that it puts some fuel feedstocks in the same low-carbon category as conventional oil even though their greenhouse gas emissions are similar to oilsands feedstocks.
"It's a bit of a freebie for (Europe) because they're not dependent on the oilsands," said Oliver. "They're getting their oil from other countries whose emissions they choose to ignore, presumably deliberately."
He has a point, said Dan Woynillowicz of the Pembina Institute.
"Some legitimate issues have been raised," he said. "There's certainly scope for (the directive) to be made more effective in achieving its objective.
"Unfortunately, I haven't seen any evidence to date that Canadian interests have actually been advocating for that as opposed to weakening the directive or having it disappear altogether."
Travis Davies of the Canadian Association of Petroleum Producers said industry doesn't object to European efforts to regulate carbon — as long as it's done fairly.
"We do not oppose policies to reduce carbon in other jurisdictions, but we do want to see Canadian products not being discriminated against," he said.
Speaking from London, England, Foreign Affairs Minister John Baird deflected questions about whether Canada would pursue action at the World Trade Organization against the directive.
“(The directive) was defeated this time. We will continue to lobby in that regard.”
John Bennett of the Sierra Club said a previous EU decision on emissions standards for vehicles suggests Europe is serious about regulating climate. He said the federal Conservative government, by lobbying so hard against the directive, has only itself to blame for the issue's rising political temperature.
"The decision has been politicized, probably by the actions of the Canadian government. I'm pretty confident that in a few months, we'll get the decision we wanted all along."
Bennett said Canada's case would be stronger if it had an internationally credible plan to reduce its own emissions.
"If the Europeans thought that Canada was doing all it could to reduce its emissions, they wouldn't be looking for ways to penalize us. They'd be looking for ways to help.
"But we've given them no choice."
— With files from Mike Blanchfield in Ottawa