Carbon Market Watch

For fair and effective climate protection.

Carbon offsets from Alberta’s tar sand operations threaten integrity of EU’s new fuel standards

02 Feb 2015

FQD report frontpageIn December 2014 implementing rules to achieve the CO2 reduction target of oil suppliers in Europe were adopted. The newly adopted fuel standard opens doors for oil companies to use questionable offsets, including from heavily contested activities related to tar sand exploitation in Alberta. It is now up to EU Member States to take the red pen when transposing the rules into national law and avoid the CO2 reduction target to be severely undermined.

The EU’s Fuel Quality Directive mandates oil companies to reduce the carbon intensity of their transport fuels by 6% by 2020, for example by incentivizing savings from venting and flaring projects in oil exploiting countries. However, the watered down language in the adopted decision could allow questionable offsets far beyond this original intention including to savings that are already mandated and claimed by other compliance schemes, such as the Alberta Offset System in Canada.

Opening doors to such carbon offsets would allow fossil fuel companies like Shell to claim dubious emissions “savings” from the construction of road sections connecting its tar sand mining activities to the highway and harbor. Shell would even be allowed to profit twice from these questionable savings by double-counting the same offset credits both under Alberta’s Offset System and under the EU’s Fuel Quality Directive.

A new report shows how the current language can severely undermine the carbon intensity reduction target and provides recommendations for Member States, when transposing the law in the months ahead, to limit the options to CDM projects in Least Developed Countries. This allows oil companies to pay for the prevention of gas flaring and venting at Angolan oil wells, which can generate more than enough carbon credits to overshoot the EU’s fuel decarbonisation target.

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