Oil sands seen as ‘threat No. 1,’ as U.S. may target dirtier fuels

Canadian oil sands producers should brace for further bad news – this time from south of the border, as the U.S. government moves toward a national climate change policy that could target dirtier fossil fuels such as the oil sands bitumen, a former U.S. energy official said yesterday.

His warning was issued yesterday at a conference on Canada as an energy superpower, and came as a new poll suggests Canadians want to protect the country’s natural resources from voracious U.S. demand for energy.
David Pumphrey, a former official in the Department of Energy and now a senior fellow at the Centre for Strategic and International Studies, said that prominent U.S. environmental groups have identified the oil sands as “threat No. 1″ in North America’s growing battle against greenhouse gas emissions.

There are more than a half-dozen bills before Congress that would introduce a national system to cap greenhouse gas emissions and establish a market for emissions credits.

Mr. Pumphrey said he does not expect President George W. Bush to sign such legislation, but added the next administration mostly likely will.

Several of those bills would “penalize” energy sources like Alberta’s oil sands, which produce far more carbon dioxide emissions than conventional, lighter crude, he said. (California has already announced a “low-carbon fuel standard” that would penalize refiners for using tar sands and other heavy oil.) Mr. Pumphrey said the Canada and U.S. governments should ensure that their climate-change strategies are complementary and that emissions trading can be carried on across borders in order to reflect the continental nature of energy markets.

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