Building the Keystone XL pipeline is only part of the equation. Once the Canadian tar sands are pumped and piped to refineries on the Gulf Coast, the industry still needs to find buyers for its end product -- much of which will be exported.
That's where U.S. Trade Representative Michael Froman comes in.
Environmental groups in the U.S. and the European Union are worried that Froman, the chief trade official for the United States, has been quietly working to pressure the EU to make it easier for U.S. refiners to sell oil from the tar sands on the European market. They say Froman is pushing his EU counterparts to weaken environmental guidelines related to greenhouse gas emissions in order to facilitate easier oil exports.
The European Commission has set an overall goal of reducing greenhouse gas emissions to 20 percent below 1990 levels by 2020. One measure aimed at meeting that goal is the Fuel Quality Directive, which requires a 6 percent reduction in emissions from transportation fuels like gasoline and diesel by 2020. A proposal currently under consideration to help achieve that goal would assign values to different types of fuel based on the emissions they generate. The proposal assigns a higher value to bitumen, a type of oil extracted from tar sands that has 12 to 40 percent higher lifecycle emissions than conventional types of crude oil.
Fuel suppliers in the EU would still get to pick what fuels they include in their portfolio, but the rating would be used to provide guidance about what goes in the mix. Based on a recent written statement, advocacy groups are concerned that Froman may be working to weaken the fuel guidelines as part of the Transatlantic Trade and Investment Partnership (TTIP), a trade deal that the U.S. and the European Commission are currently discussing.
Froman testified before the House Ways and Means Committee on July 18, and recently provided a written response to follow-up questions from the hearing. The answers were posted online last week by the trade journal Inside U.S. Trade (subscription required).
In his questions for Froman, Rep. Kevin Brady (R-Texas) said that he believes the Fuel Quality Directive's guidance on tar sands oil is "discriminatory, environmentally unjustified and could constitute a barrier to U.S.-EU trade."
"I share your concerns regarding the European Union’s development of proposals for amendments to the Fuel Quality Directive," wrote Froman in response. In particular, Froman identified what he called a "lack of adequate transparency and public participation in the process" and said that the U.S. is seeking "improvements in the EU’s overall regulatory practices" through the TTIP process.
"We continue to press the Commission to take the views of stakeholders, including U.S. refiners, under consideration as they finalize these amendments," Froman wrote.
In response to questions from the Huffington Post, a U.S. trade official said: "The United States shares the EU’s objective of reducing greenhouse gas intensity, but we have raised concerns with respect to inadequate transparency and public participation in the European Commission’s regulatory process and we will continue to engage with all stakeholders."
Refiners in the U.S. have expressed concern that assigning higher values to tar sands oil would limit their ability to export the product to the EU. While most tar sands oil comes from Canada, much of it is processed in U.S. refineries. David Friedman, vice president for regulatory affairs at the American Fuel & Petrochemical Manufacturers, said the European proposal "singles out bitumen, or oil sands crude, and oil-shale-derived crude by assigning them a higher greenhouse gas (GHG) intensity value than other crude oils" in a presentation he gave during a stakeholder session during the first round of TTIP negotiations in July, according to a copy of the presentation provided to The Huffington Post.
"If the proposal is implemented, the fuels processed from such crudes likely would not be exportable to the EU, adversely affecting the significant fuels trade between the U.S. and Europe," Friedman said in his remarks during the session.
The American Fuel & Petrochemical Manufacturers, the American Petroleum Institute, the National Association of Manufacturers and the U.S. Chamber of Commerce's Institute for 21st Century Energy sent a letter to the European Commission's director general for climate action earlier this year stating that, if the proposal is adopted, "we will give serious thought" to requesting that the U.S. government take action against the EU in the World Trade Organization.
Ilana Solomon, a trade representative with the Sierra Club, expressed concern that the European Commission would change the rules, rather than face a potential showdown with the U.S. at the WTO. "There's a concern that the EU could bow to pressure and weaken the rules before they're even finalized," said Solomon.
Other environmental groups called the words of the Obama administration's top trade official hypocritical, given the president's stated commitment to addressing climate change. What could be a spat with the EU over fuel rules also touches on one of the biggest environmental questions in front of the Obama administration right now: whether or not to approve the proposed Keystone XL pipeline, which would facilitate the import of even more tar sands oil to refineries in the U.S. In his speech in June, Obama said that the U.S. should approve the pipeline only if it "does not significantly exacerbate the problem of carbon pollution."
"Obama says he's serious about tackling climate change, but he's got his chief trade official running around Europe trying to gut their climate laws," said Glenn Hurowitz, executive director of Catapult Campaigns, a consulting firm that works on international climate issues. "The Obama team needs to get on the same page on climate."
European groups are also worried that U.S. pressure might undermine the rules. "We're concerned that these negotiations will be used to water down environmental legislation and standards that we have already agreed on, and maybe prevent future standards from being ambitious," said Nuša Urbancic, the program manager for fuels at Transport & Environment, a Brussels-based environmental organization.
The U.S. has already challenged the EU over rules limiting emissions from the airline industry. A U.S. trade official reached by HuffPost did not respond to questions about how the office's position on the Fuel Quality Directive reflects the administration's overall climate policy.
This story was updated to include a response from a USTR official.
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