27 June 2008

BELGIUM - It has been hailed as the most important European Union legal proposal in the last five years: a package of laws aimed at fighting global warming by reducing carbon-dioxide (CO2) emissions from everything from power stations to cars.

When France takes over the European Union's rotating six-month presidency on July 1, one of its key challenges will be to get all 27 member states to approve the European Commission's proposals.

Officials say that a political deal must be done by the end of the year if the EU is to maintain the moral high ground in talks on agreeing a successor to the Kyoto Protocol on climate change. However France will have to do a lot of persuading if it is to forge consensus on such a high-profile topic in just six months.

Commission experts say that several issues could torpedo talks.

First comes the question of how the EU's 27 member states, with their very different industries and economies, should share the efforts, the costs and the profits of fighting climate change. Under the commission's plan, each member state is given a reduction target based on its emissions in 2005 - the first year for which accurate EU-wide figures were available.

That proposal has angered new members such as Hungary and the Baltic states, who demand credit for making major emissions cuts between 1990 and 2005 - even though the "cuts" came largely from the collapse of Soviet industry, rather than government policies.

A second split threatens over the question of how much of the money raised by selling industrial-emissions permits the old member states should send the new ones to help them modernise.

Under the commission's proposals, industrial plants such as power stations and chemical factories will have to bid for CO2 emission permits at a national auction. The commission wants 10 per cent of the permits - and thus income - allocated to the EU's richest nations to be transferred to its poorest ones.

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