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EU leaders mull softer climate action

  European leaders sought to ease the shock for heavy industry on Thursday by watering down plans to tackle climate change in the midst of an economic crisis.


The European Union hopes to agree ways of cutting carbon dioxide to 20% below 1990 levels by 2020, heeding warnings of stormier weather and rising sea levels. Having already struck deals in recent weeks to promote green energy and curb emissions from cars, the focus has switched to the most contentious issues -- power generators, heavy industry and manufacturing. “We are going to get a historic decision,” said Finnish foreign minister Alexander Stubb. “Europe is going to show the way on energy and climate change.”

The talks assume a greater importance coming as they do just over a month before Barack Obama assumes the US presidency. Many in Europe expect closer co-operation with an Obama administration on such issues as climate change than was achieved with incumbent George W. Bush. Several leaders stressed the need to maintain the EU’s ambitious targets, but German Chancellor Angela Merkel appeared to have secured an early win for industry.

Steel, cement, chemicals, paper and other industries will be sheltered from the added cost of buying permits to emit CO2 from the EU’s flagship emissions trading scheme (ETS), according to a draft text that formed the basis for negotiations. “This covers about 90% of industry, and I don’t see any reason why Germany would not accept this proposal,” German conservative Peter Liese told Reuters. “I see it as a victory.” But critics said that handing out pollution permits for free removed the main incentive for emissions cuts. “Allocating such a large proportion of emissions permits for free...would turn the ETS into a windfall profit machine for Europe’s most polluting industries,” said Green group member Caroline Lucas.


Merkel and Italian President Silvio Berlusconi have fought successfully in recent weeks to protect businesses and their powerful auto sectors. But Berlusconi still dangled the threat of vetoing any deal. Once industry has been dealt with, negotiations will switch to bargaining with eastern European states over how much money they need to accept a deal that will punish their power sectors.

Proposals to make power generators pay for permits to pollute from 2013 are aimed at making the dirtiest plants uneconomical, but that has caused alarm in Poland, which gets over 90% of its power from highly polluting coal. Poland’s battle led to proposals in the draft that its power sector could be handed opt-outs, along with the power sectors of other big coal users, island nations and the Baltic states, which are poorly connected to the EU power grid.

But Germany created friction by countering that should be matched with free permits for its own new, cleaner coal plants. Along with opt-outs, eastern European states are also demanding a boost to a €7.5 billion “solidarity fund” designed to help replace coal with green energy and nuclear. Britain has so far put up stiff resistance to any further handouts, while Germany wants it to be part of EU budget talks. “It’s all at the expense of the western countries so it will be very difficult to negotiate an increase of even 1%,” said a Bulgarian government official.

A successful deal this week is seen as vital to catalyze global talks on cutting greenhouse gases from other big emitters such as Russia, China, India and the United States. “If we fail to reach an agreement at this summit, it will be disastrous for climate negotiations next year,” said Danish Prime Minister Anders Fogh Rasmussen. (Reuters)