Oil Sands Not Up to U.S. Snuff?

Submitted by Dan Jarvis and Adam Nott

A new fuel requirement in section 526 the Energy Independence and Security Act of 2007, signed by President Bush in December 2007 will prevent U.S. federal agencies from buying vehicle fuel derived from non-conventional sources, unless the life cycle of its greenhouse-gas emissions is the same or less than that of conventional petroleum. In particular, section 526 states:

"“No Federal agency shall enter into a contract for procurement of an alternative or synthetic fuel, including a fuel produced from nonconventional petroleum sources, for any mobility-related use, other than for research or testing, unless the contract specifies that the lifecycle greenhouse gas emissions associated with the production and combustion of the fuel supplied under the contract must, on an ongoing basis, be less than or equal to such emissions from the equivalent conventional fuel produced from conventional petroleum sources.”"

This legislation would have an impact on the Alberta's Oil Sands, which are deposits of bitumen, a molasses-like viscous oil that will not flow unless heated or diluted with lighter hydrocarbons and underlie 140, 200 square kilometers (54,132 square miles) of primarily northern Alberta; an area larger than the state of Florida.

The legislative action is viewed as a part of a growing move to take into account all greenhouse gases caused by the production and use of gasoline and other fuels. It puts unconventional petroleum, such as the synthetic crude from Canada's oil sands at a disadvantage compared to easy-to-harvest oil from the wellhead.

The Administrator of the EPA has the ability to determine the “lifecycle greenhouse gas emissions” related to the full fuel lifecycle. This will include all stages of fuel and feedstock production and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished fuel to the ultimate consumer. It will also include all direct and significant indirect sources of greenhouse gases, including specifically the impact from a change in land use.

The focus on the lifecycle as a whole means there are opportunities for reducing emissions in certain parts of the chain to help reduce higher emissions in other parts of the lifecycle. Finally, the legislation does not appear to preclude the use of offsets within the lifecycle to decrease the greenhouse gas intensity of the project.