FRANCE: July 4, 2008


PARIS - The European Union's new French presidency expects tough negotiations as it seeks to balance the interests of east and west in an ambitious deal to protect the climate ahead of international talks in December.


"It will not be easy -- it will be much work," French Environment Minister Jean-Louis Borloo told reporters as he and his peers from other EU nations met in Paris on Thursday.

The EU plans to cut carbon dioxide emissions by a fifth by 2020 compared to 1990 levels, but the goal could be raised to 30 percent in the event of an international climate accord, which many now see as inevitable.

At the top of the French agenda is the task of balancing the interests of western European states with those of eastern Europe, which fear emissions curbs will push up the price of electricity and stunt economic growth.

"In the end, the whole thing will only get up and running when the eastern Europeans who are weaker developed will be disencumbered," German Environment Minister Sigmar Gabriel said.

Eight eastern states are pushing for the EU to ease their pain by overhauling Europe's Emission Trading Scheme (ETS), the EU's main tool in the battle against climate change that makes companies pay for permits to emit CO2.


BREAKDOWN

Poland, which gets about 90 percent of its power from carbon-intensive coal, wants power companies to receive free CO2 permits for longer to prevent electricity prices rising.

Hungary, backed by six other nations, is pushing for the EU to recognise historic CO2 reductions by eastern European states when their economies failed after the collapse of communism.

Gabriel told reporters Hungary's proposal would lead to the breakdown of the entire ETS scheme.

"The proposal of the seven countries where some would not even meet their Kyoto targets is not acceptable," he said. "They must at least achieve targets under the Kyoto agreement."

Borloo told Brussels journalists visiting Paris ahead of the environment meeting that France would not back such changes, instead backing a major redistribution of the proceeds from the ETS to help those countries modernise their energy sectors.

"We will do everything to stick as closely as possible to the Commission proposals, because if you reopen them, it becomes impossible," he said.

Environment Commissioner Stavros Dimas also said the best solution was the Commission's existing proposal that 10 percent of the profits from ETS in richer countries be given to poorer nations to redress the balance.

France is making climate discussions the top priority of its six-month presidency of the EU, so the bloc can take a lead role in international discussions in Poznan, Poland in December.

Martin Bursik, environment minister for the Czech Republic, which assumes the EU presidency in January, said most of his peers expected the EU's goal of cutting CO2 by 20 percent to be moved up to 30 percent as an international accord looked likely.

"Both candidates for the US presidency are addressing the climate change issue," he said.

Dimas agreed and added: "We need all the big emitters on board, including the United States and some of the developing countries."

Borloo said nothing material had changed in Thursday's negotiations, but added: "Yes, we are really on 30 percent, or 20 percent by default."

(Additional reporting by Paul Taylor, Ilona Wissenbach and Yves Clarisse; editing by James Jukwey)


Story by Pete Harrison


REUTERS NEWS SERVICE