Bid to amend U.S. 'dirty-oil' bill fails
Existing legislation could limit business for Alberta's oilsands

By Dan Healing

Canwest News Service

Thursday, September 25, 2008

A U.S. bill would seemingly bar U.S. federal agencies from buying "dirty oil" products - including those originating in the Canadian oilsands. Here, a protest banner hangs over a tailing ponds in northern Alberta.

CREDIT: Greenpeace

A U.S. bill would seemingly bar U.S. federal agencies from buying "dirty oil" products - including those originating in the Canadian oilsands. Here, a protest banner hangs over a tailing ponds in northern Alberta.

CALGARY - A last-ditch effort to amend an energy bill that appears to ban the sale of "dirty oil" products - including those originating in the Canadian oilsands - to U.S. federal government agencies has failed in Washington.

Section 526 of the U.S. Energy Independence and Security Act of 2007 bars U.S. federal agencies such as the military and the postal service from buying alternative fuels if the production creates more greenhouse gases than conventional fuels.

Since it was signed into law last December, opponents have been fighting to repeal or amend it, not so much because they are concerned about Canadian energy exports, but because it appears to counter U.S. Defense Department experiments with coal liquefaction fuels.

Late Wednesday, the U.S. Senate denied an amendment to Section 526 that had been packaged with a Senate authorization bill.

"This is a big step for clean-energy supporters," said Alberta Greenpeace campaigner Mike Hudema.

"Especially in a Canadian context, it severely limits the U.S. government's ability to enter into contracts to get oil from the tarsands because of how large an emitter the tarsands are compared with conventional-oil operations."

He agreed the bill could also be read to prohibit other non-conventional fuels - possibly even biofuels, depending on how they are produced - unless the section is clarified.

The defeat Wednesday means the end of the battle for this president and this Congress, said Matt Letourneau, spokesman for New Mexico Senator Pete Domenici, the senior Republican on the Senate Energy and Natural Resources Committee.

"This is really largely a problem for the next administration to deal with because of the very real issue of making sure the military has the resources it needs and the ability to purchase what it needs."

He said the amendment didn't have a realistic chance of passing the Senate anyway, which is controlled by Democrats, but added that a growing number of Washington politicians in both parties are worried about the section's implications.

"Our concern would be that when those (fuel) contracts expire, a group could interpret 526 in such a way to say that it prohibits the U.S. from obtaining oil from tarsands, for instance, and then there would be a lawsuit from Greenpeace or whoever else and it would work its way through the courts.

"Meanwhile, our military relies on that fuel and we're fighting a war."

More than half of the crude oil produced in Canada comes from the oilsands and that proportion is expected to rise.

The Canadian Association of Petroleum Producers and several Canadian politicians have called for clarification of the clause.

© Calgary Herald 2008