EU leaders split over how to reach climate goals

BRUSSELS, Belgium -- European Union leaders agreed Wednesday to stick to ambitious plans to cut greenhouse gas emissions 20 percent by 2020, but divisions over how to share out the cuts were widened by fears over the impact of the financial crisis.

Italian Prime Minister Silvio Berlusconi threatened to veto the plan unless changes were made to lesson the burden on Italian industry.

"Our companies are in no state to take on costs like those we thought about last year," he told reporters.

The leaders of eight eastern European countries said the EU must balance the drive to reduce carbon emissions against "the need for sustainable economic growth" at a time of economic uncertainty.

Despite those concerns, French President Nicolas Sarkozy said all the leaders agreed to work to find a final agreement on the package before the end of the year.

"The [credit] crisis should not lower our ambitions," Sarkozy said. "No one said that they wanted to renounce the objectives."

The plan would cost governments and business billions of dollars to implement new technologies, develop renewable energy sources and reduce emissions from cars and factories.

Berlusconi said that was unfair since competitors to European industry in China and the United States would not have to face such a burdens.

The leaders of Poland, Hungary, Romania, Bulgaria, Slovakia, Latvia, Lithuania and Estonia took a similar stand, saying their countries had already made great cuts in carbon emissions since emerging from communism in the late 1980s and that "should be recognized" now.

Otherwise, they said, eastern Europeans will pay disproportionately for the EU climate change package agreed to last year that calls for slashing greenhouse gas emissions and creating a costly emissions trading program.

Sarkozy, however, said all EU nations "bear their historic responsibility as leaders of Europe to face up to the climate challenge." He said investing in clean energy could spark economic growth.

"We can't delay, we cannot postpone," Sarkozy said.

The recent financial turmoil has triggered fears of a global recession that would make governments less keen to get major polluters such as energy generators, steel makers and cement producers to pay billions into a cap-and-trade emissions scheme.

The EU cap-and-trade program could impose $68.8 billion a year in polluter fees. Each of the bloc's 27 governments, including the eight eastern European countries, and the European Parliament need to approve the plan for it to become law.

Over the past year, negotiations on the package between EU governments and lawmakers have intensified. It is hoped both sides can endorse it by year's end so it can be enacted in 2009.

If the EU backs off, it would be seen as a harsh blow to U.N. climate change talks planned for December in Poland that will include delegates from more than 190 countries. The conference is to work out the details of a climate change accord to succeed the Kyoto Protocol, which expires in 2012.

Ernest-Antoine Seilliere, president of BusinessEurope, which represents 20 million small, medium and large companies, warned the EU leaders to take into account the costs involved amid the financial turmoil that threatens to plunge Europe into recession.

The lobby group is worried the extra burden of pollution fees plus the economic uncertainty will make European industry unable to compete in the global market.

"We support the need to maintain competitiveness in Europe, it's an important subject that has to be taken into account when any European package is implemented to reduce CO2 emissions," he said.