Oil sands hit major 'hurdle' in California Alberta's energy resources at disadvantage under state rule limiting greenhouse gases
Byline: Martin Mittelstaedt The tar sands are one of the most prolific sources of energy in North America, but the fabled petroleum resource may have trouble finding a market in California under a new state policy requiring all vehicle fuels sold there to produce lower emissions of greenhouse gases. While most new laws on cleaner-burning fuel look only at tailpipe emissions, the new California policy, announced this week by Governor Arnold Schwarzenegger, has an unusual twist. It will count gases discharged during the full life cycle of the petroleum, a move that puts Alberta's oil sands at a disadvantage because gasoline derived from this source requires huge quantities of energy to extract and mine the sticky bitumen. The oil sands have long been controversial in Canada because of their large greenhouse-gas emissions, but the action in California is the first sign that crude from this source might not find a welcome market in the United States on environmental grounds. "This is such a groundbreaking plan," said Hal Harvey, environment program director for the California-based Hewlett Foundation, which helped pay for the research that led to the new directive. Under the state's so-called low-carbon fuel standard, all transportation fuel sold will have to reduce the amount of greenhouse gases emitted during its production and final use by at least 10 per cent by 2020. Mr. Harvey says Alberta's oil sands are such a relatively high- emission source of energy -- he puts it at about 20-per-cent higher than gasoline from conventional crude -- that he believes refiners will be reluctant to buy the product when the new policy, to be issued as a directive by Mr. Schwarzenegger, goes into effect. "I don't think it would be purchased," Mr. Harvey said. "It creates a very large hurdle." He said Canadian tar sands producers will have to develop ways of substantially lowering greenhouse-gas emissions or risk being shut out of the California market. "What it really suggests is that it will behoove the Canadian oil industry to think about a carbon mitigation strategy," Mr. Harvey said. Very little synthetic crude from Alberta is currently sold in California, the largest U.S. fuel market. The bulk of U.S. exports go to the Rocky Mountain and Midwest regions, according to officials with Suncor Energy Inc. and Syncrude Canada Ltd., the two big producers in the Alberta oil sands. Syncrude spokesman Alain Moore declined to comment on the impact the directive will have on the company, but said it has been able to reduce its greenhouse-gas emissions by about 1.7 per cent a year for each barrel of oil produced through efficiency measures. Brad Bellows, a spokesman for Suncor, said the Canadian industry estimates the amount of extra greenhouse-gas production from synthetic oil may be as little as 7.6 per cent, compared with conventional crude, far lower than Mr. Harvey's estimate. Mr. Bellows said the company will be able to cope with the new regulation if the lower Canadian figure is accepted. "I don't think that we're actually at any serious disadvantage with synthetic crude," he said. Mr. Bellows said that because of the paucity of U.S. pipeline connections, the quantity of oil from the tar sands that enters California is limited. But Mr. Harvey predicted that the California measure will spread to the U.S. markets that are more important for Alberta's oil sands. California has generally led U.S. states in the field of air-pollution initiatives, and he expects the idea of regulating the full life cycle emissions from gasoline and diesel fuel to be adopted by other U.S. jurisdictions. "I think it will [spread]. It's a very appealing measure," he said. The California standard is expected to be in place formally by late 2008, according to state timelines. According to the state, refiners will be able to meet the new directive through measures such as blending low-carbon ethanol into their fuel, or purchasing credits to offset emissions from other companies that have reduced their discharges. Late last year, the Pembina Institute, a Canadian environmental think tank, estimated that the oil sands will contribute nearly half of the country's growth of greenhouse-gas emissions between 2003 and 2010 unless the industry adopts measures to offset discharges. (c) 2007 CTVglobemedia Publishing Inc. All Rights Reserved. -- Darryl McMahon It's your planet. If you won't look after it, who will? The Emperor's New Hydrogen Economy (now in print and eBook) http://www.econogics.com/TENHE/ _______________________________________________ Biofuel mailing list Biofuel@sustainablelists.org http://sustainablelists.org/mailman/listinfo/biofuel_sustainablelists.org Biofuel at Journey to Forever: http://journeytoforever.org/biofuel.html Search the combined Biofuel and Biofuels-biz list archives (50,000 messages): http://www.mail-archive.com/biofuel@sustainablelists.org/
