Canada has long-opposed the EU's consideration of crude derived from oil sands as a dirty oil, which, if adopted, would impose higher carbon offsets on European importers of the product.
The government of Canadian Prime Minister Stephen Harper says such a move would be discriminatory and would unfairly label oil sands as having higher carbon emissions without also studying greenhouse gases involved in the production of some types of conventional crude oils the EU imports.
The European Council was prepared to vote on the EU's proposed Fuel Quality Directive in June but after intense lobbying by Canadian officials and threats of a trade war, the European Union indicated Friday it would push back its assessment of oil sands.
Isaac Valero-Ladron, spokesman for EU Climate Action Commissioner Connie Hedegaard, said the decision was delayed to allow the European Commission time to make a stronger case.
"The commission has decided to make an impact assessment and submit the proposal to the council (of ministers) in early 2013. This way we accommodate some of the concerns expressed by stakeholders," he told the Montreal Gazette via e-mail.
The move brought statements of relief from Ottawa.
"We hope that the European Commission will conduct a full impact assessment that deals with the potential costs of this measure to consumers and also the potential costs to the EU's economy," Canadian Natural Resources Minister Joe Oliver said in a statement.
"We are not opposed to the goal of the Fuel Quality Directive," he added. "However, we remain strongly opposed to Canadian oil sands crude being unfairly discriminated against. Canada wants to ensure that any directive or policy that emerges in regard to the Fuel Quality Directive is fair."
Oliver said he has asked a senior ministerial official to meet with EU leaders in Brussels this week "to secure more information and to offer Canada's cooperation with all aspects of this study and to ensure Canada has an opportunity to make submissions to this study."
The purpose of the Fuel Quality Directive is to assist EU member countries in achieving their greenhouse gas reduction targets by assessing the overall environmental impact of crude oil feedstocks.
Because the production of oil sands creates significant amounts of greenhouse gases -- three-five times as much as traditional crude production, environmental groups say -- oil sands crude gets a higher value from the European Union than traditional crudes.
Ottawa insists that "independent" studies have shown that the lifecycle greenhouse gas emissions of oil sands crude are similar to, or in some cases lower than, several crude oils imported and used daily in the European Union.
Canada also asserts imposition of the directive would add to fuel costs in Europe.
But environmentalists dispute those claims and are urging the EU to stand firm.
"The European Commission is clearly committed to their science-based proposal," Hannah McKinnon of Climate Action Network Canada told the Canadian Broadcasting Corp.
"This decision calls big oil and the Canadian government's bluff. It will put an end once and for all to the disingenuous claims around the science and the cost that are getting in the way of Europe's efforts to do its part when it comes to reducing their greenhouse gas pollution."