Carbon reporting for fossil fuels is effective EU policy
19/04/2012 - By obliging fuel suppliers to report the origin of their petroleum products and the CO2 emissions occurring during extraction, processing, production and transport to the pump (well-to-wheel emissions) the European Union has come up with an effective and relatively simple instrument in the drive to reduce the CO2 emissions associated with fossil transport fuels. Because the rules apply to all producers serving the European market, European companies and refineries will suffer no competitive disadvantage, moreover. The anticipated reporting costs will amount to no more than half a Euro cent per 50-litre tank of vehicle fuel.
Link to report
Link to press release
These are the results of the first independent and publicly available study on the costs and impacts of reporting the well-to-wheel emissions of the transport fuels marketed in the EU. The study was carried out by CE Delft, Carbon Matters and the Energy Research Centre of the Netherlands (ECN) at the request of Transport & Environment.
The results are important because EU environment ministers will soon be taking a decision on this extension of the Fuel Quality Directive. One of the targets laid down in this directive, which came into force in 2009, is a 65% reduction in the well-to-wheel carbon emissions of transport fuels in 2020 relative to 2010. The directive already sets out how the carbon footprint of biofuels is to be measured, but it was only last autumn that the European Commission announced a proposal for parallel calculations for fossil fuels.
As the study shows, oil companies and refineries already collect a wealth of data on the origins of the crude oil coming on to the European market and the production methods involved, for customs purposes or strategic stock management, for example. No more than 20-25% of the current oil flow falls outside current reporting obligations.
The Commission’s recent proposal marks the first policy-level recognition of there being differences in the greenhouse gas emissions associated with various oil extraction processes. ‘Unconventional’ fuels derived from natural bitumen (tar sands), oil shale and coal-to-liquid and gas-to-liquid processes are thus to be assigned higher default emissions than oil from conventional wells (still the vast bulk of the market). Fuel produced from tar sands is deemed to be 23% more carbon-intensive than conventional crude, for example. Identifying the carbon footprint will give fuel suppliers an incentive to opt for cleaner processes, allowing them to comply more readily and cost-effectively with the EU’s transport-fuel carbon requirements. Although European sales of unconventional transport fuel are currently minimal, the envisaged reporting obligations create the clarity needed for long-term investments in oil extraction. In addition, they bring fossil transport fuels under the same regime as biofuels, for which carbon emissions must already be reported.