BUSINESS
02/20/2012 10:16 EST | Updated 02/20/2012 10:19 EST

EU Oil Sands Fight: Canada 'Threatens Trade War' Over Possible Oil Sands Ban, The Guardian Reports

Canada is threatening a trade war with the European Union over a proposal that would effectively ban oil sands bitumen from Europe, the Guardian reported on Monday.

"Canada will not hesitate to defend its interests, including at the World Trade Organisation," Canadian envoys stated in multiple letters to European energy officials. The letters were obtained by activist group Friends of the Earth Europe under freedom of information requests.

The EU is debating whether to issue a Fuel Quality Directive that would label oil sands product 22 per cent more polluting than conventional oil, effectively banning it from being used in the 25-country area. A vote on the move is scheduled for Feb. 23.

"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, I want to state that Canada will explore every avenue at its disposal to defend its interests, including at the World Trade Organisation," said one letter, from Canada's ambassador to the EU, David Plunkett, to Connie Hedegaard, the EU's climate action czar.

Canadian officials reiterated the assertion that a ban on oil sands product would "unscientific" in a statement to the Guardian, an assertion the EU rejects.

"The Commission identified the most carbon-intensive sources in its science-based proposal. This way high-emission fossil fuels will be labelled and given the proper value. It is only reasonable to give high values to more polluting products than to less polluting products," Hedegaard told the Guardian.

The Guardian's revelations come as a new Canadian study has found that Alberta's oil sands have relatively little impact on carbon emissions, and that coal and natural gas pose a much larger problem.

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