Wednesday

7th Dec 2022

EU faces multiple trade wars defending green policies

  • EU climate targets draw fire from aviation and oil industry (Photo: Mikko Itälahti)

EU measures to cut CO2 emissions and improve the climate have sparked outrage in the global aviation industry and most recently in Canada, home to the world’s second largest fossil fuel reserves.

The Guardian newspaper has revealed that the EU intends to label fuel from tar sands, which would include oil from the Canadian Alberta province, as “highly polluting” in a vote in an expert committee dealing with energy issues on Thursday (23 February). The label could render extraction and exploitation of the tar sands more difficult and more expensive.

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The move follows a decision by the European Commission in October to qualify tar sands as a quarter more CO2 polluting than crude oil. The EU executive is also preparing a draft bill that would require suppliers to reduce transport-fuel carbon emissions.

Canada’s ambassador to the EU and its oil minister has warned the new labelling may spark a trade war. A letter sent to EU commissioners in December stated “Canada will not hesitate to defend its interests, including at the World Trade Organisation.”

According to the Albertan government, the province ranks third after Saudi Arabia and Venezuela in terms of proven crude oil reserves and generated €2.8 billion in royalties from oil sands projects in 2011. As a whole, the industry was worth €8.6 billion in 2009 and employs some 140,000 people.

The tar sands, a wide expanse of heavy molasses-like bitumen seeping to the surface in Canada’s western province of Alberta, is described by environmental groups as one that accelerates climate change and destroys surrounding communities.

Both the Canadian and Albertan governments announced an oil sands research agreement last Thursday (16 February) that they claim would help reduce energy use and greenhouse gas emissions.

Aviation industry in Moscow

Separately, nations opposing the EU’s green tax on all airlines operating in Europe are meeting in Moscow on Tuesday (21 February) to discuss countermeasures.

The Emissions Trade Scheme (ETS) was launched on 1 January this year and aims to help Europe achieve its goal of cutting emissions by 20 percent by 2020, with aviation accounting for about 3 percent of the EU's total greenhouse gases.

The United States, China, India and Russia along with 22 countries oppose ETS which they claim is illegal and too expensive as it forces to airlines to help pay for pollution.

On Monday, climate change commissioner Connie Hedegaard proposed that the disgruntled countries come up with another plan.

"We know what you don't like, but what's your constructive proposal for a global agreement on aviation?” she posted on her Twitter account.

Hedegaard quoted China Daily which said any attempt to launch “a full-scale trade war against the EU merely for the sake of China’s aviation industry interests” would be unwise.

China is flat-out refusing to comply with the new rules and banned its airlines from increasing fees to absorb the tax in February. Beijing says Chinese airlines would have to pay an additional €97 million per year.

The meeting in Moscow ends on Wednesday.

China confronts EU on aviation tax

China has banned its airlines from taking part in Europe's Emissions Trading System, which forces all airlines flying in and out of Europe from 1 January this year to buy pollution permits.

EU to put higher pollution price on tar sands

The European Commission on Tuesday proposed that oil derived from tar sands be given a higher greenhouse-gas emission value, a move slammed as "unjustified" and "discriminatory" by Canada, the world's largest producer of this fossil fuel.

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