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Poland, Germany in last-minute EU climate deal push

10/12/2008 - 23:25

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By Marcin Grajewski and Markus Wacket

BRUSSELS/BERLIN (Reuters) - Poland and Germany aim to pave the way for a European Union deal on tackling climate change at a summit on Thursday, with proposals to break a deadlock on who should foot the bill for the effort.

The measures, which sources said would help Poland and other poorer EU states bear the cost of schemes aimed at making Europe the world leader in the fight against global warming, would need backing from all 27 EU states at the two-day meeting.

The summit also aims to win accord on a 200 billion euro ($260 billion) stimulus package aimed at wrenching the bloc out of recession, and to encourage Ireland to call a new referendum on an EU reform treaty already rejected by its voters this year.

But internal EU differences could thwart accord on both climate change and the economic crisis.

"If I see that Italian interests will be hurt in an excessive way, I will use our veto rights," Italian Prime Minister Silvio Berlusconi warned on Wednesday in a possible foretaste of wrangling to come.

A source close to talks said Germany and Poland -- at the center of an east-west stand-off on who should pay for the climate package -- had agreed between themselves on how to ease its impact on Poland's heavily coal-dependent power stations.

Poland would accept a deal under which only in 2019 would it have to oblige all its power stations to pay for permits to pollute under the bloc's Emission Trading Scheme (ETS), six years later than now proposed, according to the source.

In return, Germany would ask for special treatment for more modern, coal-based plants, the source said.

IRISH DEAL

Separately, a Polish negotiator said the two countries were also considering putting a joint proposal to the summit for up to 50 billion euros of EU aid from 2014 to help poorer European countries tackle climate change.

The source said the fund would be part of the EU's central budget rather than paid for out of funds won from auctioning pollution permits -- which Germany has long resisted.

"The proposal may change the whole course of negotiations at the summit," said the source. A negotiator from a central European country acknowledged the existence of the proposal.

French President Nicolas Sarkozy is keen to cap his 6-month chairing of EU business with a deal on the climate package.

But the German-Polish proposals could face resistance from others concerned about the additional cost to them or about a watering-down of a plan to cut emissions by a fifth by 2020.

Germany is also at the heart of the debate on the economy. Chancellor Angela Merkel has been nicknamed "Madame Non" by some European media for resisting calls by French President Nicolas Sarkozy for Berlin to inject more money into stimulus efforts.

EU diplomats expect her to oppose calls for the Union to follow Britain and others in cutting value-added taxes and to demand that member states adhere to EU budget deficit limits.

EU officials are, however, upbeat about chances of a deal with Ireland on holding a new referendum on ratifying the Lisbon Treaty of institutional EU reforms its voters rejected in June.

A French presidency paper proposed that Ireland's concerns that the treaty would undermine its sovereignty and influence in Brussels be addressed to the "mutual satisfaction" of all in time for the charter to take effect by the end of next year.

(Additional reporting by Mark John and Pete Harrison in Brussels, Berlin and Rome bureaus; editing by Andrew Roche)

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