EU - governments, industry force concessions on climate laws

18th March 2008, Comments 0 comments

European Union's leaders struck a blow for their heavy industries by pushing through concessions on the bloc's flagship laws on climate change.

Brussels - The European Union's leaders struck a blow for their heavy industries by pushing through concessions on the bloc's flagship laws on climate change.

After two days of at times acrimonious talks in Brussels, the 27- member union's highest politicians insisted that the EU's central body propose ways to protect polluting industries from unfair competition immediately - rather than waiting for a global deal.

"If there is no international deal, we should already have a (law) ready on how to deal with energy-intensive industries, rather than only starting to think about it if nobody else joins us," Germany's Chancellor Angela Merkel, who spearheaded the move, said.

Under plans set out on January 23 by the EU's executive body, the European Commission, most EU industries will as from 2013 have to buy permits to emit carbon dioxide (CO2, the gas most linked with global warming) at auction, rather than receiving them for free.

Industry lobbyists had protested that this would make it impossible for them to compete with firms in countries with less stringent environmental rules.

The commission responded by promising to study the problem with an eye to proposing solutions by 2011, in the belief that to do so earlier would damage the EU's position in global talks on climate change, which are set to culminate in Copenhagen in December 2009.

"Our goal is to have an international agreement," Commission President Jose Manuel Barroso stressed.

But on Friday a strong group of states, led by Germany and France, re-wrote the conclusions of the regular meeting of EU leaders to insist that the issue be "analysed and addressed urgently in the new (law), so that if international negotiations fail, appropriate measures can be taken."

The decision from the EU's highest decision-making body effectively forces Barroso's hand, since the EU is committed to bringing the new law into force by early 2009.

The summit did give the head of the Brussels-based executive some measure of approval, calling the climate package as a whole "a good starting point and basis for agreement."

But even that message hid a covert slap in the face, since the original draft had called the package an "excellent" starting point.

And the political agreement reached on Friday left aside a number of crucial points which look likely to be the subject of bitter debate before a final deal is approved.

Chief among them is the proposal from Britain's Prime Minister Gordon Brown that environmentally-friendly products should be sold at a lower rate of VAT than less clean goods.

The proposal, backed by France, "will start the debate in many member states about how and whether household goods ... can incentivize consumer behaviour towards buying energy-efficient and environmentally friendly goods and services," Brown said.

However, VAT is a sensitive issue, since much of the EU's common budget comes from the VAT which consumers pay in each member state, and any decisions on changing rates have to be approved unanimously.

"We haven't taken the decision yet ... Some (states) were opposed to opening the debate," French President Nicolas Sarkozy said.

And EU members are yet to take up the cudgels over the issue of how hard each should try to cut the bloc's overall CO2 output.

The commission's January proposal set out individual targets for each member state on how much they should reduce emissions and boost their use of clean energy. EU leaders did not even address that issue on Friday, leaving it to future summits in June and October.

Alongside their environmental deliberations, EU leaders also approved a much watered-down proposal from Sarkozy on the creation of a so-called "Union for the Mediterranean" to promote cooperation in the area.

And they agreed for the first time that the strong euro could damage the bloc's economy.


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