* Canada lobbied fiercely against previous proposal
* Policy includes method for distinguishing various fuels
* Member states still have to debate the plan
By Barbara Lewis
BRUSSELS, Oct 7 (Reuters) - The European Commission onTuesday proposed scrapping a mandatory requirement to label tarsands oil as highly polluting after years of industryopposition.
The new proposal abandons one obstacle to Canada shippingcrude from tar sands to Europe and is likely to draw strongcriticism from environmental campaigners and Green politicians.
It is suggested in a revised draft law on how refinersreport the carbon intensity of the fuel they supply.
The debate about labelling tar sands, also known as oilsands, dates back to 2009 when EU member states approvedlegislation with the aim of cutting greenhouse gases fromtransport fuel sold in Europe by 6 percent by 2020, but failedto agree how to implement it.
In 2011, the Commission, the European Union executive,agreed tar sands should be given a carbon value a fifth higherthan for conventional oil, but member states could not agree andthe Commission has been reconsidering the proposal ever since.
Confirming a draft seen by Reuters earlier this year, theproposal released on Tuesday only requires refiners to report anaverage of the feedstock used. They do not have to single outtar sands.
It retains, however, a method for calculating the carbonintensity of different fuel types over their life-cycle.
"It is no secret that our initial proposal could not gothrough due to resistance faced in some member states," ClimateCommissioner Connie Hedegaard said in a statement.
"However, the Commission is today giving this another push,to try and ensure that in the future, there will be amethodology and thus an incentive to choose less polluting fuelsover more polluting ones like, for example, oil sands."
Oil sands crude, being exploited by the major oil firms,such as BP Royal Dutch Shell and ExxonMobil, costs more to produce than conventional crude and usesmore energy, water and emits more carbon over its life-cycle.
Found in clay-like sands, it has to be dug up in open-pitmines with massive shovels, or blasted with steam and pumped tothe surface, before oil can be extracted.
The revised proposal still has to be debated by memberstates through a fast-track procedure meant to take less thantwo months and it also needs a sign off from the EuropeanParliament.
Meanwhile, a summit of EU leaders this month is expected todecide in outline on a new set of 2030 climate and energy goalsto follow on from the 2020 targets.
They include a proposed 40 percent cut in greenhouse gasemissions, compared with a 2020 goal to cut emissions by 20percent versus 1990 levels. The six percent 2020 transporttarget is meant to contribute to the overall 20 percentemissions goal. (Editing by Ruth Pitchford)