EU Backs Emissions Proposal After Concessions to Industry

By CHARLES FORELLE and JOHN W. MILLER
BRUSSELS -- European Union leaders on Friday backed landmark proposals to cut the bloc's greenhouse-gas emissions by 20% in coming years, but gave substantial concessions to industry and to coal-burning countries in Eastern Europe.

The tension over how much to pay to fight climate change reflects the strains the global downturn is putting on the EU's agenda, as Germany and the United Kingdom square off over the wisdom of running up debt to boost growth.
Leaders from the EU's 27 nations approved on Friday a coordinated call for fiscal-stimulus packages of around 1.5% of the bloc's gross-domestic product, or about €200 billion ($267 billion). The language they used, however, was vague enough to permit countries to do more or less.
Associated Press
French President Nicolas Sarkozy, right, talks with German Chancellor Angela Merkel during a round table meeting at an EU summit in Brussels.
Germany has proposed a stimulus package that would pump around €4 billion ($5.3 billion) into the economy over the next year. Meanwhile the U.K. plans about £20 billion ($30 billion) in stimulus by 2010, including short-term tax cuts.
"All this will do is raise Britain's debt to a level that will take a whole generation to work off," German Finance Minister Peer Steinbrück said in an interview with Newsweek. U.K. Prime Minister Gordon Brown dismissed the comments, saying they reflected internal German politics.
Friday's EU agreement won't force Germany to expand its stimulus package. However, Chancellor Angela Merkel said she will discuss possible new stimulus measures in January.
The steel industry and other business lobbies welcomed Friday's climate-change deal, while it drew criticism from environmental groups. "Millions of poor people have been left in danger because EU leaders bowed to business-lobby pressure," said Elise Ford, head of the Brussels office of the Oxfam charity.
French President Nicolas Sarkozy hailed the agreement as historic. It would require the EU to cut emissions by at least 20% and raise use of renewable energy to 20% of the bloc's energy mix by 2020. The package must still be approved by the European Parliament.
The European Commission had proposed that polluting power plants pay in auctions for permits to emit greenhouse gases. Under Friday's agreement, poorer EU countries that rely heavily on coal -- a description tailored to Poland and others in Central and Eastern Europe -- will be allowed to give a large number of permits to power plants for free.
In a concession to industry backed by Germany, polluters that might otherwise relocate their plants to avoid EU rules would get some free emissions permits. In addition, polluters would be able to buy a large share of their permits from a United Nations system that operates in developing countries, freeing them from the expensive task of cutting gas output at their own plants.
Polish consumers could face a doubling or more of their electricity bills, Mr. Sarkozy said, defending the compromises. "It's not a matter of environmental protection," he said. "It's simply not socially acceptable."
On another contentious issue, EU leaders agreed to concessions that open the way for Ireland to hold a new referendum on an EU institutional reform. Known as the Lisbon treaty, it would hand Brussels more authority, strengthen the bloc's foreign policy tools and give it a permanent president.
Irish voters rejected the treaty in June. The other 26 nations approved the treaty by parliamentary vote.
Ireland got assurances it would keep a seat on the commission, the EU's executive arm. The bloc had planned to cut the number of commissioners -- now one per country -- by a third. The other leaders also agreed to write guarantees protecting Ireland's low corporate-tax rates and its restrictions on abortion.
As long as the "detail work" is approved, Ireland will hold a referendum before the end of October 2009, Irish Prime Minister Brian Cowen said.—Joe Parkinson and Nicholas Winning contributed to this article.
Write to Charles Forelle at charles.forelle@wsj.com and John W. Miller at john.miller@dowjones.com