The European Commission was wrongheaded when, in October, it singled out oil extracted from Canada's ‘tar sands' by proposing a higher carbon-emissions value for it than for other sources of fossil fuel.

Given that very little Canadian oil currently makes its way to Europe, labelling it as ‘dirty' would be largely symbolic. But such a designation would matter: it would muddy the issues that now surround extraction of Canadian oil and inflame trade tensions. It could also, in the longer term, lead to more imports from countries that are not paragons of civil, political and economic rights.

But first, some background that, while not the basis for the Commission's proposal, has affected the mood music, to the detriment of debate.

For one, the oft-used term ‘tar sands' is incorrect. Tar originates from distilling coal. Canada's oil comes from clay sand, through two processes that are cleaner than distilling coal. In the traditional method, oil is extracted through mining that scars the landscape. The oil is then separated from the sand using heat. This approach, however, is in decline and accounts for only 20 per cent of oil extracted from Canada's oil sands. The rest is ‘steamed' out of the ground through a process that resembles conventional oil drilling. The impact of oil sands on Canada's landscape is therefore falling.

The proposed EU action, though, is based on greenhouse-gas emissions. According to a study by IHS-Cambridge Energy Research, oil derived from sand emits as much as Nigerian or Venezuelan crude oil, but six per cent more than the average crude oil consumed in the US.

This difference is small and rendered less significant still by a point that the Commission misses: most emissions come not during extraction but during usage. As IHS-Cambridge noted, “70 per cent to 80 per cent of the greenhouse-gas emissions come from the combustion of the fuel in an engine, so the vast majority of emissions remain the same whether the oil comes from west Africa, Latin America or Canada”.

Set against these small, theoretical environmental gains are three very real considerations: demand, security and human rights.

Global demand for oil will rise from 89.2 million barrels per day now to 99 million barrels per day in 2035, according to the International Energy Agency (IEA). The IEA also predicts that unconventional oil – such as Canada's oil sands – will play “an increasingly important role in world oil supply through to 2035, regardless of what governments do to curb demand”.

For Europe, the question is not whether the world will use more oil, but where it will come from?

Oil's origin should matter for Europeans who care about their own security and about others' human rights. Canada, unlike most oil-exporting countries, is politically stable and has a superb human-rights record – unlike, say, Iran, Saudi Arabia or Venezuela. But since European industry faces obligations to reduce its carbon footprint, rather than its human-rights footprint, the Commission's proposal will encourage Europe to focus on the former at the expense of the latter.

Lastly, the Commission's directive is not worth a trade clash with one of Europe's best partners.

Canadian Prime Minister Stephen Harper and his government have hinted quite clearly that Canada may complain to the World Trade Organization if Canadian oil sands are labelled ‘dirty,' arguing that the designation is protectionism under another guise.

Even if the dispute does not deteriorate to that level, an EU directive that discriminates against Canada's oil would add a complication to talks on a comprehensive EU-Canada free-trade agreement.

Stated bluntly, the EU's directive would send this unfortunate signal: human-rights issues and progress in open trade matter less than marginal differences in greenhouse-gas emissions.