Researchers for California’s Low Carbon Fuel Standard have recently released new data measuring the carbon intensity of various crude oil blends, including diluted bitumen (a.k.a. ‘dilbit’) and upgraded synthetic crude oil (‘SCO’) from the Canadian oilsands. The Californian findings will not be well-received by anti-oilsands activists.

Among the findings that may surprise:

• There are 13 oil fields in California, plus crude oil blends originating in at least six other countries, that generate a higher level of upstream greenhouse gas emissions than Canadian dilbit blends;

• Crude oil from Alaska’s North Slope, which makes up about 12 per cent of California’s total crude slate, is actually “dirtier” than the Canadian dilbit known as “Access Western Blend”;

• The “dirtiest oil in North America” is not produced in Canada, but just outside Los Angeles, where the Placerita oil field generates about twice the level of upstream emissions as Canadian oilsands production; and

• The title of “world’s dirtiest oil” goes to Brass crude blend from Nigeria, where the uncontrolled release of methane during the oil extraction process generates upstream GHG emissions that are over four times higher than Canadian dilbit.

What can one take away from these findings?

From the perspective of the United States, the new data should allay President Obama’s concerns about the impact of the Keystone XL pipeline on climate change and the level of U.S. and global GHG emissions. In particular, California has confirmed the State Department’s analysis that the foreign crudes that would feed Gulf Coast refineries in the absence of Canadian bitumen generate comparable (and in some cases higher) carbon emissions.

Opposing the Keystone pipeline is actually a giant ‘green herring’. About 80 per cent of the emissions attributable to a barrel of oil occur during the downstream combustion of refined fuel in a vehicle — not during the upstream production of crude oil.

From a European perspective, the data strengthens the argument that the EU’s proposed Fuel Quality Directive will discriminate against the 300,000 barrels of Ultra Low Sulfur Diesel (ULSD) fuel that currently exported daily from the U.S. — “clean” fuel that enables the use of new emission technologies to reduce European air pollution, but is often made from Canadian bitumen feedstock.

The discrimination occurs because the current FQD assigns an “average” value for natural bitumen feedstock of 24.7 g/MJ, and an “average” value for conventional crudes entering the EU market of 5.2. Californian researchers have determined that none of the oilsands blends generate emissions as high as the purported “average” score of 24.7 (the scores range from 16.3 to 23.8), while all of the principal conventional crudes imported by the EU score higher than their assigned “average” score of 5.2. In fact, the upstream emissions generated by the four Russian crude blends range from 9.6 to 18.3 – the latter essentially equal to Canadian dilbit.

As a result, imports of ULSD fuel from the U.S. will be penalized; Russian and African conventional crude will be able to enter the EU market with an artificially low score that eliminates any need to reduce actual GHG emissions; and European suppliers will be able to increase the actual carbon intensity of their crude oil supply, while reducing it for FQD statistical purposes.

EU officials may revise the Fuel Quality Directive in light of such data (as well as the developments in Ukraine that raise obvious energy security concerns). However, it is highly unlikely that the activists opposing the Keystone pipeline will allow a few inconvenient facts to ruin their story.

This is unfortunate, since opposing the Keystone pipeline is actually a giant “green herring”. About 80 per cent of the emissions attributable to a barrel of oil occur during the downstream combustion of refined fuel in a vehicle – not during the upstream production of crude oil. These downstream emissions occur in equal amounts whether the fuel was made from light or heavy oil, or the crude oil was produced by conventional or unconventional methods. So concentrating on killing a single pipeline merely distracts from the real challenge – to develop the low-carbon fuels, technologies and ubiquitous systems that will be key to moving the world off oil.

Peter Burn is counsel in the Public Policy and Regulation group of the global law firm, Dentons. During the 1980s he served as counsel (tax and trade policy) to Finance Minister Michael Wilson. More recently, he served as a senior advisor in the Greenhouse Gas Reductions Directorate in Environment Canada, and as an advisor to Environment Minister Jim Prentice.

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