The European Commission has announced that it will treat oilsands exports as dirtier than conventional oil in a proposed ranking of fuels and that has government officials concerned about Canada's oil producing image.

If the proposal wins the support of European Union members, it would effectively ban oilsands crude from the EU market. The move comes despite intense lobbying from Ottawa.

As it stands, Canada exports very little oil to Europe, but officials are worried the decision could produce a domino effect.

The EU Commission agreed to set a higher value for carbon emissions from the oilsands compared to crude oil extracted from conventional wells.

The higher value means the oilsands are considered to emit more emissions than regular oil and that may influence buyers, who have carbon targets to meet.

Industry experts in Calgary say our global image and future sales may be at stake because of the negative assessment.

At the same time, an audit says the federal government's knowledge about greenhouse gas emissions and oilsands pollution is so spotty that key decisions are made without fully understanding the environmental consequences.

Environment Commissioner Scott Vaughan tabled the audit on Wednesday, and found that the federal government's approach to climate change was "disjointed, confused and non-transparent."

As a result, Vaughan says there is no way of telling whether Ottawa is on track to meet its targets for cutting greenhouse gases, despite spending more than $9 billion on it.

In another development, court action is getting underway in the United States to try and stop preliminary work on an oil pipeline from Alberta to Texas.

Three conservation groups are expected to launch a lawsuit in a Nebraska court that targets the Keystone XL Pipeline Project.

The complainants allege that the U.S. Fish and Wildlife Service allowed TransCanada to start clearing a path for the line through Nebraska, despite a federal law barring projects from launching before they receive approval.

The lawsuit also names the U.S. State Department, Secretary of State Hillary Clinton and the U.S. Secretary of the Interior.

(With files from The Canadian Press, The Associated Press and