Oil firms braced for anti-tar sand resolutions

British companies involved in the controversial extraction of oil from Canadian tar sands in Alberta are preparing themselves for a backlash from shareholders and environmentalists bent on highlighting their opposition to the plans.

According to reports in The Observer yesterday, an increasingly vocal group of shareholders and environmentalists are planning to turn the forthcoming BP, Shell and Royal Bank of Scotland annual meetings into a referendum on these controversial operations.

The Co-operative Group and campaign group Fair Pensions have had a shareholder resolution accepted for BP and Shell's AGMs, which will request that both companies undertake reviews on the risks associated with tar sands extraction and report back to shareholders at their 2011 AGMs.

Both BP and Shell insist they can extract oil from tar sands in a responsible way, with the latter arguing that CO2 emissions can be minimised by using carbon capture and storage techniques.

But environmental groups have long-maintained that liquid fuels extracted from tar sands are among the dirtiest and most carbon-intensive forms of fuel available. Various studies have shown that the huge amounts of energy required to extract and refine oil from tar sands means the fuel generates two-to-four times the amount of greenhouse gases per barrel compared with conventional oil.

The Co-operative and Fair Pensions have also argued that there are financial risks associated with tar sands projects, as the introduction of any carbon pricing mechanism could make them economically unviable.

The organisations will reportedly release a special briefing paper for investors this week designed to counter recent statements by BP and Shell that looked to justify their involvement in carbon-intensive oil extraction in Alberta on the basis that it was needed to meet rising oil demand.

The Co-op briefing warns institutional investors with highly diversified por tfolios that allowing BP and Shell to pursue their costly tar sands extraction could undermine their holdings in other areas of the economy.

"The issue for many large investors is not just whether the macroeconomic conditions necessary to ensure the profitability of oil sands production are in place, but whether the continued expansion of oil sands production could aggravate climate change, thereby putting at risk gross domestic product growth and the performance of their portfolio as a whole," says the paper.

In addition, Friends of the Earth and Platform today published a new report, Cashing in on Tar Sands – RBS, UK Banks and Canada's Blood Oil, which claims the bank has provided loans of $7.5bn (£4.9bn) in the past three years to companies carrying out tar sand development in North America.

The launch of the report coincides with attempts by a coalition of NGOs to seek a judicial review against the Treasury over its willingness to allow RBS to finance companies alleged to be exacerbating climate change and disregarding the human rights of local indigenous peoples. RBS is now largely publicly owned and the NGOs believe the government could call a halt to lending to carbon-intensive projects that are counter to its own climate change policies.

In related news, Fair Pensions last week launched a web tool to allow individual pension holders to lobby their fund managers, who are big investors in BP and Shell. The organisation said more than 1,200 people have used the tool since its launch.