March 18, 2010 / 7:44 PM / 10 years ago

U.S. mustn't discriminate against Canadian oil sands

WASHINGTON (Reuters) - The United States should not discriminate against the Canadian oil sands industry, Canada’s ambassador in Washington said on Thursday, warning that trade restrictions could cause the top energy supplier to U.S. markets to seek out other customers.

Canada’s abundant oil sands resources have been threatened in the U.S. market with proposed climate change policies that would place additional costs on fuels that emit higher levels of carbon dioxide.

The policies are unfair to Canada’s oil sands industry, Ambassador Gary Doer said in a wide-ranging interview with Reuters, especially since both countries have signed on to an international agreement to lower carbon emissions 17 percent below 2005 levels by 2020.

“We absolutely want states and provinces to not discriminate against one sector without looking at the big picture,” Doer said.

With an estimated 173 billion barrels, Canadian oil sands are the largest source of crude outside the Middle East. But development of these reserves requires open pit mines and carbon-spewing processing plants, placing oil sands producers at a disadvantage under any fuel standard that rewards low-emission sources.

California has already adopted a so-called low carbon fuel standard, which attempts to limit the carbon intensity of transportation fuels burned in the state. At least 11 other states are considering similar measures.

Ultimately if the United States becomes less open to oil sands, Doer said the fuel can go elsewhere.

“This is a commodity that can sold somewhere else. It’s not as if the United States is the only country interested in purchasing oil,” Doer said.

Plans are already in place to build a multibillion-dollar pipeline to Canada’s West Coast, where tankers could ship oil sands-derived crude to refineries in Asia, although the industry has said it could supply both markets.

Pointing out that emissions from U.S. coal plants are much higher than emissions from oil sands, Doer said both Canada and the United States have to work to limit the greenhouse gases blamed for global warming.

“We’re not saints. We don’t discuss this issue as holier-than-thou,” Doer said. “We all have challenges. The United States has challenges in coal. We have challenges in the oil sands.”

Despite the actions from states, Doer said the Obama administration demonstrated its commitment to oil sands when it approved the $3.3 billion Alberta Clipper pipeline project last year. The pipeline will mostly transport crude from the oil sands to the United States.

President Barack Obama has voiced support for developing a national low carbon fuel standard in the past, but he has not taken a hard line against oil sands.

Editing by Marguerita Choy

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