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EU unveils blueprint for climate fight

Brussels (EU) - The European Union's executive met on Wednesday to adopt landmark proposals that will make the 27-nation bloc a leader in the fight against climate change, but tradeoffs will include higher energy bills.

The European Commission will detail proposals to cut planet-warming greenhouse gas emissions by one-fifth and split among EU states a target to produce one-fifth of all power from renewable sources like the wind and sun by 2020.

The Commission wants to spur talks among industrialised countries for a global climate deal by 2009 to help arrest global warming which risks raising sea levels and causing more floods and droughts.

Brussels has had to fine-tune its plans to placate anxious industry leaders, who fear higher energy costs will tilt competitiveness further in favour of China and India, which have no emissions limits, at a time of record oil prices. "I am all for setting an example for the rest of the world. But I am against committing economic suicide," EU Enterprise Commissioner Guenter Verheugen told Germany's ARD television just before the meeting began.

"We will have to ensure that energy-intensive industries, that can't function any other way than by using energy to produce products like steel and aluminium, remain competitive." The Commission's plans will implement renewable energy and emissions-cutting targets agreed by EU leaders last March, and require approval by member states and the European Parliament.

Stiff resistance is expected over targets for each country to cut greenhouse gases and install renewable energy. Business, meanwhile, has sought to soften a planned overhaul of the EU's Emissions Trading Scheme. Last-minute arguments in the Commission focused on the definition and special conditions for energy-intensive industries such as steel, cement, aluminium and possibly chemicals and pulp and paper, EU officials said.

"If we were to relocate our industries outside Europe we would then have to transport steel to Europe, adding emissions," said Philippe Varin, president of the European Confederation of Iron and Steel Industries, and chief executive of Anglo-Dutch steelmaker Corus, owned by India's Tata Steel. From 2013, power generators will get fewer permits over time to emit carbon dioxide and have to buy them all, EU sources said. They will pass the extra electricity costs on to consumers. Until now they got most permits for free.

Power bills for industry and households will also rise as a result of targets to supply more energy using clean energy technologies which are more costly than fossil fuels.

Higher bills were an inevitable result of efforts to arrest global warming, the Chief Executive of the British arm of the German utility E.ON, Paul Golby, said on Tuesday.

"The time of a cheap energy world is over," he told Reuters. The Commission's measures will cost around half a percent of the EU's combined wealth, or about 60 billion euros ($86.99 billion) a year, Commission President Jose Manuel Barroso said this week. EU officials say they will add about 10% to electricity prices.

Fine print in final drafts went to the wire, as EU officials faced a barrage of last minute lobbying from environmentalists, governments and energy-intensive business.

Industrialists from the steel, cement, aluminium sectors seemed to have won their case, and will get their fixed quota of emissions permits for free from 2013, paying more over time.

Leaders of the steel sector were among the last to lobby Environment Commissioner Stavros Dimas on Tuesday, warning they would be forced to shift production outside Europe if emissions curbs and costs of auctioning emissions permits put them at a competitive disadvantage against rivals in China or India.

"We have major concerns that the auctioning is being very much diluted due to scaremongering by industry," said Stefan Singer of the WWF environmental campaign group.

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