* Higher value for tar sands retained, but voluntary
* Canada raised issue on sidelines of G7 talks
* Commission still debating the draft
By Barbara Lewis
BRUSSELS, June 5 (Reuters) - European Union policymakers propose to scrap a mandatory requirement to label oil from tar sands as more polluting than other forms of crude following years of lobbying from top producer Canada, according to a draft document seen by Reuters.
The change removes one obstacle to Canada shipping crude from tar sands to Europe, but will be criticised by environmental campaigners.
The clay-like sands have to be dug up in open-pit mines with massive shovels, or blasted with steam and pumped to the surface, before oil can be extracted.
As a result, the oil costs more to produce than regular crude, uses more water and energy, and emits more carbon.
Canada, oil majors and the refining industry have fiercely opposed EU plans to label tar sands as highly polluting.
In the context of the Russia/Ukraine crisis and fears about European energy security, Canada argues Europe should be embracing its oil as a secure form of energy.
"We don't see the crisis in Ukraine as simply an opportunity to market Canadian products, but obviously we're deeply engaged in a discussion with our allies on how we can make sure that globally our energy supplies are secure and stable," Canadian Prime Minister Stephen Harper told reporters after G7 talks in Brussels on Thursday.
He did not specifically mention the proposed EU law, but Canada's natural resources minister said he raised it on the sidelines of G7 energy ministers' talks in Rome last month.
The European Commission draft document seen by Reuters proposes that oil refiners would only have to report an EU-wide average of the emissions for the feedstock they use.
"The proposed methodology requires suppliers to report a (European) Union average greenhouse gas emission intensity per fuel with an option to report supplier specific values," the draft says.
In an annex, it retains the value of 107 grams of CO2 for natural bitumen, another name for tar sands, compared with 93.2 for conventional crude, but refiners would not have to report using crudes with the higher value.
However, the draft proposes a review by the end of 2016 to again address the case for introducing higher values for individual fuel sources.
The debate about labelling tar sands as particularly dirty dates back to 2009 when EU member states approved legislation with the aim of cutting greenhouse gases from transport fuel sold in Europe by 6 percent by 2020, but failed to agree how to implement it.
In 2011, the Commission agreed tar sands should be given the 107 grams of CO2 value, but member states could not agree on the proposal and the Commission has been reconsidering it ever since.
Many scientists, however, say that tar sands oil should be left in the ground if the world is to stand a chance of preventing the most devastating consequences of global warming.
The Commission said it could not comment on an unpublished draft, which is still being discussed within the EU executive. (additional reporting by Robin Emmott in Brussels and David Ljunggren in Ottawa; editing by Jason Neely)