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EU's Barroso rebuts concern over economic harm from climate cut

European Commission President Jose Barroso rebutted industry concerns that Europe will harm its competitiveness by stepping up the fight against climate change without the US or China going along.

A target for a minimum 20% cut in European greenhouse gases by 2020 to be set at a European Union summit starting today in Brussels won't deal a blow to the economy, Barroso said. „It's good for European competitiveness,” Barroso said in a pre-summit interview. „We are now in a transition to a low-carbon economy and we believe there are clear advantages for the first movers.” Europe's economy notched the fastest growth in six years in 2006, and industry leaders warned today that investment and jobs may leave if the EU goes it alone in setting new climate-change targets. Goals for emissions cuts „must be realistic, must not hurt the competitiveness of the economy in Europe, and must be shared internationally,” Ernest-Antoine Seilliere, head of BusinessEurope, the EU's employers federation, told a press conference earlier.

The EU would boost its target for greenhouse-gas cuts to 30% if rich nations including the US follow suit, according to a draft of a communiqué to be issued tomorrow after the 27-nation summit. The Kyoto accord, mandating greenhouse-gas cuts of 5.2% by 2012 from 1990 levels, exempts developing nations such as China and is opposed by the US, which is both the world's biggest economy and its biggest polluter. Fighting climate change fits in with the EU's broader strategy of increasing its energy independence with more investment in non-carbon energies such as solar and wind power, Barroso said. „It's not just about European warming, it's about global warming,” Barroso said. EU leaders will also spar over whether to set a binding target for renewable energies to make up 20% of European energy use by 2020. Coal users such as Poland and the Czech Republic have formed a bloc of a dozen countries opposed to a numerical target. „Europe is already leading in terms of technologies for some of these renewables so we are also creating new markets and new employment,” Barroso said.

With oil prices above $60 a barrel, EU leaders are looking at cheaper gas and electricity as the key to boosting an economy that has lagged behind the US for most of the past decade. The summit won't give full backing to calls by the commission, the bloc's central regulator, to „unbundle” or break up big utilities like Electricite de France SA and E.ON AG in order to bring down prices in the €250 billion ($329 billion) gas and electricity market. Splitting up utilities „isn't the only way to go,” German Chancellor Angela Merkel, the summit's chairwoman, said yesterday. Barroso declined to say how far the commission would go in using its powers as the EU's market watchdog to overcome the political leaders' opposition to forcing power producers to sell their transmission businesses.

„We have to increase the separation between the generation of power and the distribution of power,” Barroso said. „I hope there will be some progress in this direction. Maybe it will not be the end of the road, but it will be the beginning.” Launching antitrust cases against utilities for overcharging and abusing their dominant market positions takes time and would leave businesses guessing about the EU's legal framework, he said. „We would prefer to make it with a new conceptual clear legal framework and not just launching infringement procedures against one or two companies,” Barroso said. (Bloomberg)