From: Reuters
Published March 14, 2008 03:53 AM

EU aims to set pace in fighting climate change

By Darren Ennis and Ingrid Melander

BRUSSELS (Reuters) - EU leaders agreed on a timetable for action on Thursday to tackle climate change that they hope will enable them to set the pace in global talks next year, but some voiced unease about the methods.

The European Union sees itself as a world leader in the fight against global warming after EU countries agreed last year to cut emissions by 2020 and increase the share of wind, solar, hydro and wave power in electricity output by the same date.

After chairing the first day of a two-day summit, Slovenian Prime Minister Janez Jansa told a news conference all 27 leaders agreed to adopt a liberalization of the European energy market in June and a package of measures to fight global warming and promote green energy in December.

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"We must reach agreement in the first months of 2009 at the latest," said Jansa.

French President Nicolas Sarkozy said he was hopeful of reaching a package deal on climate change under France's presidency of the EU in the second half of this year.

But several leaders said a deal would be difficult because of conflicting national priorities.

German Chancellor Angela Merkel led a group of countries demanding early guarantees of special treatment for energy-intensive industries such as steel, cement, paper and aluminum, so they could plan investments, diplomats said.

Britain, Sweden and the Netherlands opposed Merkel's demand that the EU agree in 2009 on conditions for big energy users, saying it would weaken the EU's hand in global negotiations on curbing emissions.

"Everybody stated their priorities. Many were quite nervous about liberalization and carbon leakage," a senior EU diplomat said. "Carbon leakage" occurs when production is transferred to countries with lower environmental standards.

Sarkozy told reporters: "The main concern is implementing a mechanism that will hit imports from those countries that don't play the game."

But Merkel believed any EU measure would have to be compatible with World Trade Organization rules, diplomats said.

CURRENCY WORRIES

Failure to agree on the details by this time next year would delay EU laws and weaken the bloc in United Nations talks on curbing emissions with other countries, including the United States, in Copenhagen in November 2009.

Leaders also approved a watered-down Franco-German plan for a Union for the Mediterranean to boost ties with the EU's southern neighbors after months of bitter wrangling.

Highlighting threats to European economic growth, the euro hit another record high of $1.56 on Thursday and oil prices hovered near a peak of $110 a barrel.

That prompted the head of the main EU employers' group, Ernest-Antoine Seilliere of BusinessEurope, to call for international talks on stabilizing foreign exchange markets.

But Jean-Claude Juncker, the Luxembourg prime minister who chairs the group of 15 euro zone countries, said he thought growth in the area was not at risk.

Showing his green credentials, British Prime Minister Gordon Brown told reporters on a train to Brussels he would propose EU sales tax breaks on eco-friendly fridges, light bulbs and other domestic appliances.

But European Commission President Jose Manuel Barroso brushed the idea aside, saying several EU states had said they opposed it and that tax proposals required unanimous agreement.

Aside from cutting emissions by at least one-fifth by 2020 from 1990 levels, EU states have agreed to use 20 percent of renewable energy sources in power production and 10 percent of biofuels from crops in transport by the same date.

Jansa acknowledged growing debate among scientists and economists about the desirability of the biofuels target, saying: "We're not excluding the possibility that we'll have to amend or revise our goals."

Environmental pressure group Greenpeace called the emissions target "way short of the mark."

"We have wasted a lot of precious time, too much time, during Bush's administration," Greenpeace's Mahi Sideridou told Reuters, adding she expected that whoever succeeds President George W. Bush's next year will be more committed to action.

Some fear the cost of tackling global warming could drive industry out of Europe. John Monks, general secretary of the European Union Trade Union Confederation, called for a "carbon tax" on imports from less environmentally conscious parts of the world.

(Additional reporting by Ingrid Melander, Darren Ennis and Marcin Grajewski, Adrian Croft in Brussels and Ian Simpson in Milan; editing by Paul Taylor and Ralph Gowling)

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