Canadian tar sands developers to face fresh legal challenge

The Canadian tar sands industry became mired in yet more controversy this week following an international appeal for financial aid to support an indigenous community's legal battle against further development.

The charitable trust fund has been set up to help the Beaver Lake Cree Nation, which claims that prospecting, strip mining and drilling for oil in their ancestral lands is polluting water supplies and damaging both human health and that of local wildlife. In the latter instance, hundreds of miles of pipelines have also allegedly been disruptive to age-old breeding and hunting grounds.

The Cree gave up their ancestral lands in the boreal forests of Alberta - which were once almost as large as England and Scotland combined - in return for guaranteed rights to hunt, fish and gather plants in the region. But they attest that damage to the environment is now preventing them from doing so and are preparing to take on the governments of Canada, Alberta and huge corporations such as Shell in order to protect such rights.

Attempting to extract tar sands in Alberta has already cost Shell dear, however. The project bled £25.4m in the first three months of operation, but may see the company having to dig deeper into its pockets in order to cover both legal fees and initiate reputational damage limitation exercises.

The UK-based Co-operative Financial Services organisation has already donated £53,000 to the Cree's fighting fund and sees the struggle as potentially the last and best hope to stop new tar sands development - a cause to which the ethical investor has made a high-profile commitment. The company has already provided £50,000 to help record the testimony of Cree elders laying out the damage they believe has been done to the environment.

The company also tightened up its ethical lending criteria earlier this year to exclude firms not only directly involved in extracting and producing fossil fuels that generate high levels of greenhouse gas emissions - which includes tar sand exploiters - but also those involved in developing and distributing them.

The Cree case is expected to take several years to come to court and is likely to cost millions of dollars. But the multinational corporations involved are unlikely to give up without a fight as they rush to exploit the estimated 315 billion barrels of oil believed to be beneath vast areas of the Canadian wilderness.

Despite the fact that both environmental and aboriginal groups say that extracting heavy oil from tar sands produces between three and five times more greenhouse gas emissions than conventional crude, oil still accounts for 35 per cent of global energy supply and the multinationals are searching for alternative supplies now that more traditional global sources are starting to diminish.

Moreover, petitions and letters sent by a coalition of 18 US environmental organisations to US secretary of state Hillary Clinton requesting that she block the permits required by companies operating the Alberta Clipper tar sands-derived oil pipeline have so far fallen on deaf ears. Construction of the pipeline began last month and by the middle of 2010 it is expected to transport as many as 450,000 barrels of such oil each day to refineries in Superior, Wisconsin.