EU climate chief sees green fuel debate in months

BRUSSELS (Reuters) - European Union governments may begin talks in the coming months on a proposal to promote greener fuels, potentially black-listing fuels whose production is more polluting, according to Europe's climate chief.

EU Climate Change Commissioner Connie Hedegaard said default emission values for fuel derived from tar sands and oil shale -- widespread in Canada and Estonia -- will be peer reviewed and included in the proposal.

"I now expect that a proposal could be discussed with the member states in the coming months," Hedegaard told EU lawmakers this week.

"It is the Commission's intention, at this stage, to present a draft implementing measure ... that will include default values both for oil sands and for oil shale," she added.

European Union sources said last month that Canada threatened to pull out of trade talks if Europe blacklisted tar sands, but Ottawa has denied that.

The European Commission initially proposed last year that tar sands be ascribed a greenhouse gas value of 107 grams per megajoule of fuel -- making clear to buyers that it had far greater environmental impact than average crude oil at 87.1 grams.

But the European Union later appeared to back down on the issue, putting commerce ahead of a strategy to curb greenhouse gases from transport fuels by 6 percent this decade.

The inclusion of default values for shale oil -- whose use EU member state Estonia has been promoting -- may help to head off any complaint by Canada to the World Trade Organization that the green fuel norms discriminate against it.

Hedegaard said she had consulted closely with EU trade chief Karel De Gucht "to ensure that our approach is robust in terms of our obligations under international law."

(Reporting by Pete Harrison, writing by Juliane von Reppert-Bismarck; Editing by Rex Merrifield and Jane Baird)