EU climate package needs improvement, Germany says

BERLIN (Reuters) - European Union proposals to slash greenhouse gas emissions are seriously flawed and fail to take sufficient account of business needs, the German Economy Ministry said on Tuesday after a meeting of government and industry officials.

Deputy Economy Minister Jochen Homann and all other speakers had expressed reservations about key parts of the EU plan because it didn't strike the right balance between climate protection and promoting competitiveness, the ministry said in a statement.

"The conclusion of the conference is that there is only limited scope for reducing (emissions) in the industrial sector and the EU climate package needs improvement in key areas," the ministry said.

As long as big polluters such as the United States, China and India were not effectively integrated into the international climate protection regime, any success achieved in Europe would be pointless, it added.

The European Commission, the EU's executive body, adopted plans in January to transform Europe's energy supply by 2020 but delayed key decisions on how to soften the impact on industry.

The Commission said the measures were a vital step in the fight against global warming and they would help curb the bloc's rising dependency on imports of fossil fuels.

The ministry said concerns expressed about the plan at the Berlin conference on Tuesday included:

- Previous efforts to protect the environment were not taken into account and polluting countries sometimes derived benefits.

- Germany would be unable to achieve an EU-mandated goal of reducing the quota of emissions trading permits by 21 percent compared to 2005 levels without the loss of growth and jobs.

- A Commission proposal to auction emissions certificates would deprive industrial companies of capital and threaten their investment plans and competitiveness. Companies in the paper and glass sectors could face bankruptcy.

- Cutting the quota of emissions trading permits would push up the price of certificates and as a big fossil fuels burner Germany would be especially hard hit.

"Due to exploding oil and gas prices, further measures to achieve climate goals should be considered only with great caution," the ministry said.

"Rising energy prices are already a strong incentive to investment in renewable energies, energy savings and energy efficiency," it added.

For a factbox on the EU's energy and climate plan, double click on.

The 10 percent biofuels target mentioned in the factbox has since been called into question by several EU nations and NGOs.

(Additional reporting by Paul Taylor in Brussels)

(Reporting by Iain Rogers)