The upcoming vote in the EU on implementing the Fuel Quality Directive, expected next month, has generated a great deal of press in Canada because the directive targets Canada’s oilsands by assigning a default value of emissions which is higher than that applied to conventional fuels.
The EU’s policy is aimed in the right direction – Article 7a of the EU’s Fuel Quality Directive (FQD) obliges suppliers of transportation fuel to reduce the lifecycle greenhouse gas emissions intensity of their fuel by 6% by 2020, relative to 2010 levels. Despite good intentions, some of Canada’s criticisms of the FQD make sense. Most importantly, the FQD eliminates incentives for both improvement in emissions intensity and data disclosure from many sources of fuel, both conventional and unconventional. The FQD also has the potential to mute incentives to innovate for some oilsands firms.