Suppliers of oil sands fuel shunned

Sheila McNulty, Financial Times, Feb. 10 2010--Two big US companies have decided to avoid suppliers that source fuel from Canada’s oil sands to curb their carbon footprints.

The decisions by Whole Foods Market, an organic grocery chain, and Bed Bath & Beyond, a household goods company, underline how industry is moving to fill the void left by inaction at Copenhagen and the failure of the US Congress to limit carbon emissions.

Both companies are responding to ForestEthics, a non-governmental organisation that last year began campaigning to lead the US corporate sector away from oil sands fuel, which has a higher carbon content than conventional crude oil.

Industry and environmentalists disagree on how carbon-intensive oil sands fuel is, but both agree it is higher than traditional crude. The oil sands represent the largest proven oil reserve outside Saudi Arabia and reduce Washington’s dependence on Middle Eastern fuel.

“There’s going to be constant tension between environmental issues and security of supply,” said Robin West, chairman of PFC Energy, a consultancy.

ForestEthics is negotiating with more than 30 companies to adopt similar policies.

“Companies are moving with lightning speed,” said Todd Paglia, ForestEthics’ executive director. “It’s a core issue they know they need to move on. The failure of Copenhagen makes companies more willing to do this; leadership must come from somewhere.”

Michael Besancon, Whole Foods’ senior global vice-president of purchasing, distribution and marketing, said the company replaced Marathon Oil, which sources fuel from the oil sands, with CountryMark, which uses only American crude, as its supplier.

“We’re looking at our carbon footprint, and tar sands fuels are higher carbon,” Mr Besancon said. “We’re trying to be a leader – out in front on this issue.'” Marathon said it had no knowledge of the lost business.

While the fuel used by these companies is not enough to hurt the oil industry, they could lead others to follow, as industry takes carbon reduction into its own hands.

Congress passed the 2007 Energy Independence and Security Act, limiting government procurement of alternative fuels to those from which life cycle greenhouse gas emissions are equal to or less than those from conventional fuel. Canada’s oil sands are considered unconventional fuels, and producing them emits more greenhouse gas.

The Bush administration, nonetheless, encouraged oil sands development, as has the Obama administration, which in August approved a pipeline to carry oil sands fuel into the US. Fuel from the oil sands continues into US government supply.

Eben Burnham-Snyder, spokesman for Representative Edward Markey, chairman of the committee on energy independence and global warming and who introduced the legislation, said refineries took fuel from multiple sources, so high carbon fuels were sometimes mixed with low ones. But the law was to prevent contracts solely for high carbon fuels, he said.

Susan Casey-Lefkowitz, senior attorney at the Natural Resources Defense Council, said the impact would come as refinery expansions were completed, leaving some with a preponderance of fuels from the oil sands.