EU finalizes deal to fight climate change

By Pete Harrison and Huw Jones

BRUSSELS/STRASBOURG (Reuters) - The European Union finalized plans for its battle against global warming on Wednesday, seeking to lead the way toward a broad alliance including other big polluters like China and the United States.

The European Parliament approved a cut in carbon dioxide emissions to 20 percent below 1990 levels by 2020, heeding warnings of severe weather, famine and drought as the atmosphere heats up.

The deal takes on a greater importance coming just before Barack Obama assumes the U.S. presidency, amid hopes in Europe he will cooperate more on tackling climate change than incumbent George W. Bush.

"Happily Bush is going," said European Environment Commissioner Stavros Dimas. "Everybody knows what Mr. Obama has set as priorities -- energy security and climate change."

World leaders will meet in Copenhagen next December to try to agree a global deal, but preparatory talks in Poland ended last week with deep divisions between rich and poor nations.

The advancing economic crisis had at times threatened to derail the EU's climate negotiations.

A myriad of concessions to water down the costs for industry helped pin down a deal, although this fueled criticism from environmental groups.

DISSENT

Chancellor Angela Merkel and Prime Minister Silvio Berlusconi had fought successfully for industries like German steel, chemicals and cement and Italian glass and ceramics, as well as their powerful auto sectors.

Lawmakers approved measures on Wednesday to cut CO2 emissions from new cars by 18 percent by 2015, after intense lobbying by the industry won it a three year reprieve.

"There was an explosion in dissent and manufacturers were at loggerheads," said Italian socialist Guido Sacconi, who led the rules for cars through parliament.

"Trying to secure a conclusion came when the car industry found itself at the epicenter of the economic crisis and this heightened difficulties," he added.

Green group politicians branded the rules as a sell-out to industry, while industry group ACEA repeated calls for billions of euros in EU support to help manufacturers meet the targets.

The biggest threat to a deal was the opposition of nine former communist nations, which feared the deal would ramp up costs for their highly polluting coal-fired power sectors.

To buy their support, the EU has offered a partial exemption and agreed to give them 12 percent of revenues from the EU's flagship emissions trading scheme (ETS), which makes industry buy permits to pollute.