EU panel urges more CO2 offsets, no east-west deal

BRUSSELS (Reuters) - European Union lawmakers rejected an attempt on Monday to overhaul emissions curbs in favor of eastern states, and they were split on whether to allow more carbon offsetting through payments to developing countries.

Environment groups were angered by the move toward increased carbon offsets, which allow countries, companies and individuals to pay others to cut greenhouse gas emissions on their behalf.

The European Parliament's influential industry committee rejected an attempt to move to 1990 the existing 2005 benchmark year, compared to which all EU emissions reductions are judged.

The attempt was based on a proposal earlier this year by Hungary that sought recognition of the huge cuts in CO2 emissions in eastern Europe during the nineties when industry contracted after the collapse of communism.

Poland, Hungary and six other eastern nations say EU climate goals will force up power prices and wreck their economies and are fighting for the targets to be eased.

The committee voted by a narrow margin to increase by one third the amount of offsets that EU nations can use toward their carbon caps, as industry and some governments seek to ease the cost burden of EU climate policy.

Twenty one lawmakers voted in favor of the move, with 20 against.

The proposals apply to emissions not covered by the bloc's emissions trading scheme (ETS), such as transport, buildings agriculture and small businesses, which together account for about a half of European carbon emissions.

"The committee vote would allow up to 80 per cent of emission reductions to be met by the purchase of external offset credits," said a statement by environment campaigners including Greenpeace and

WWF.

"This would mean that by 2020, member states' emissions from non-industrial sectors would only be reduced by a feeble 2 per cent, compared to 2005 levels," they added.

The EU Parliament will reach a final position in coming weeks on a swathe of proposals to slash EU greenhouse gases by at least a fifth by 2020 -- measures far more ambitious than rival developed nations including Canada, the United States and Japan.

Parliament will then enter negotiations with European leaders and the Commission to decide the final, binding laws.

The overall committee opinion was adopted by 35 votes in favor, with 10 votes against.

(Reporting by Pete Harrison; Editing by Marguerita Choy)

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