UPDATE 4-EU lawmakers watch credit crisis in climate fight

(Recasts, adds reaction)

By Pete Harrison and Gerard Wynn

BRUSSELS Oct 7 (Reuters) - European Union lawmakers maintained a tough line on curbing carbon emissions in the fight against climate change on Tuesday, but handed some concessions to EU industries in the grip of an economic downturn.

In a marathon string of votes dubbed "Super Tuesday", the European Parliament's environment committee said power generators should pay for all their carbon emissions from 2013, but vowed to prevent EU industry becoming uncompetitive.

The votes likely set the parliament's position in energy and climate negotiations with EU leaders ahead of a final agreement expected later this year or early in 2009.

"The economic climate has just gone from bad to worse, but for all the trouble we have, the single greatest challenge facing us is climate change," said Irish Conservative member Avril Doyle, who led the legislation through the influential committee.

"The crisis in liquidity is not a helpful backdrop, but it does not mean my colleagues or I should drop the ball."

Europe is forging ahead with plans to curb emissions, hoping that other countries will follow suit and mindful of U.N. warnings that climate change could cause more heatwaves, floods, droughts and higher sea levels.

JOB CUTS

The committee said power generators should pay for all their carbon emissions, in the EU emissions trading scheme (ETS), but backed a gradual approach for industries that might lose to rivals in countries with less strict regulation.

That was not enough for some.

"This is going to cost us jobs," said German Conservative member Karl-Heinz Florenz. "Europe will face a tough burden in the internal market, while America and China's industry will enjoy a light regime."

But Doyle told Reuters the committee had sent a clear political message that vulnerable industries such as steel, aluminium and cement needed protecting.

Voting to make power generators pay for all carbon permits from 2013 had been painful for eastern European countries dependent on heavily polluting coal-fired plants, she added.

Coal-dependent Poland has tried to assemble a blocking minority of nations to prevent the move.

"Some of our Polish colleagues were nervous, we have to show solidarity," Doyle said. "If there are real problems for some of our newer member states, I think they'll be looked after."

Selling permits rather than giving them to utilities, as now, would also transfer up to 30 billion euros ($40.76 billion) to member states -- which should be spent on helping poor countries cope with climate change, the committee added.

It said energy-intensive sectors staring at a global slowdown should pay for just 15 percent of permits in 2013 rising to 100 percent in 2020 -- throwing out proposals to grant them for free until a global climate deal is struck.

"This was a slap in the face to all the forces that want to weaken EU climate and energy policy," said Sanjeev Kumar of environment group WWF. Other environment groups said lawmakers had not gone far enough to protect the planet.

SILVER BULLET

In a surprise move, the EU lawmakers backed billions of euros of aid to test carbon capture and storage (CCS) technology, fitted to coal plants, which many scientists view as the nearest thing to a climate change silver bullet.

The proposed measure could raise up to 10 billion euros ($13.59 billion), in the biggest backing yet of the untested technology, estimated the MEP in charge of CCS legislation, Chris Davies.

In a carrot and stick approach, however, the lawmakers also voted for such strict carbon curbs on power plants that, if enacted, it would rule out coal power from 2015 unless fitted with CCS. That is likely to face opposition both from greens and from industry depending on cheap fuel during a downturn. (Additional reporting by Nina Chestney and Daniel Fineren in London; editing by James Jukwey)