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Tar sands to take hit from U.S. bill

The Globe and Mail reports that, “Alberta’s oil sands producers and their U.S. refiners face sharply higher costs to reduce greenhouse gas emissions under legislation approved by the U.S. House of Representatives and championed by U.S. President Barack Obama (if now passed by the U.S. Senate).”

“Under the cap-and-trade plan (in the American Clean Energy and Security Act), U.S. refiners will have to buy permits for each tonne of carbon dioxide that they send into the air.”

“Such a system would heavily penalize oil companies that ship oil sands bitumen to the United States because refining the raw bitumen into petroleum products such as gasoline and heating oil is more energy-intensive and higher in emissions than is the processing of conventional oil.”

Susan Casey-Leftowitz, a lawyer with the Washington-based Natural Resources Defense Council, says, “Any climate legislation that we’re looking at is going to make refiners think twice about building a dependence on the heavier crudes that are more energy intensive to upgrade and refine. The argument for expanding the tar sands is that there would be expanding demand for that oil in the United States. But this bill signals there is not going to be that expanding demand.”

The article notes, “Canada’s petroleum industry has carefully monitored the bill’s progression and lobbied U.S. legislators in a bid to convince them that a rule that damages Canadian oil production also damages U.S. energy security.”

“The oil industry did dodge a major bullet when the House dropped plans to include a low-carbon fuel standard, similar to one adopted in California, that would impose significant costs on oil sands producers. …Many states, however, have signalled their intention to follows California’s lead once it has worked out the complexities of the regulations.”

The full article is at http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/oil-sands-to-take-hit-from-us-bill/article1201222/.