WRAPUP 8-EU nears climate, stimulus deals

* Italy, Poland see EU climate deal in offing

* Ireland wins concessions to allow EU vote re-run

* Draft climate proposals ease burden on industry

By Paulo Biondi and David Brunnstrom

BRUSSELS, Dec 11 (Reuters) - European leaders moved towards agreement on a multi-billion dollar programme to tackle economic recession and a climate change plan amended to limit impact on struggling industries.

Green groups warned that the European Union's credibility as a force in tackling climate change would be endangered if it accepted too many changes to a plan to cut carbon dioxide emissions by 20 percent by 2020.

One British group said compromises in EU climate policy, which will be key to world talks next year to produce a successor to the Kyoto pact on climate change, amounted to a 'meltdown'.

Italian Prime Minister Silvio Berlusconi, who has threatened to veto a deal without concessions to protect key industries, emerged from the first day of a two-day EU summit, declaring: "We are heading towards a compromise...We are getting what we want."

Poland, which had demanded concessions on its heavily polluting coal-based power industry, also registered agreement.

"The prime minister (Donald Tusk) achieved everything he wanted in negotiations on the climate package," an official told Reuters. "The deal is flexible, allowing for the modernisation of the Polish power sector.' [ID:nLB662446]

German Finance Minister Peer Steinbrueck highlighted tensions underlying the summit with an attack on British Prime Minister Gordon Brown who, he suggested, was "tossing around billions" to fend off a deep recession.

But German Chancellor Angela Merkel, who opposes heavy spending for fear it could lead to escalating budget deficits, said she was keen to seal a 200 billion euro ($260 billion) stimulus package, amounting to some 1.5 percent of GDP.

Belgian Prime Minister Yves Leterme said leaders had reached an outline deal on a stimulus package equivalent to the projected 1.5 percent of the bloc's gross domestic product.

Luxembourg Prime Minister Jean-Claude Juncker warned against dilution of climate measures in the drive to revive commerce.

"The economic crisis will pass, the climate crisis will stay. We have to do something," he told reporters.

Finnish Foreign Minister Alexander Stubb said Friday would bring a 'historic decision' on energy and climate change.

'Europe is going to show the way,' he said.

Several leaders stressed the need to maintain the EU's ambitious targets; but Merkel, seeking to limit damage to industry, appeared to have secured compromises.

Steel, cement, chemicals, paper and other industries will be sheltered from the added cost of buying permits to emit carbon dioxide from the EU's flagship emissions trading scheme (ETS), according to a draft text that formed the basis for talks.

"This covers about 90 percent of industry, and I don't see any reason why Germany would not accept this proposal," German conservative Peter Liese told Reuters. "I see it as a victory."

British Green group member Caroline Lucas said the proposals represented 'the lowest possible common denominator'.

'The eyes of the world are on the EU. The EU's credibility as a leading actor on climate change is in freefall. It's not too late for heads of state and government to intervene and save face.'

In an interview with Newsweek magazine, German Finance Minister Steinbrueck singled out British Prime Minister Brown for abandoning fiscal prudence and switching to policies that he said would saddle a generation with debt.

"The speed at which proposals are put together under pressure that don't even pass an economic test is breathtaking and depressing," Steinbrueck said in the interview, published on the magazine's website on Wednesday.

Britain is to pump 20 billion pounds into the economy to 2010 with tax cuts and 3 billion pounds of capital spending. Germany has cited plans worth 32 billion euros over two years but with a budget hit of just 10.9 billion euros to 2012.

Steinbrueck later sought to play down his comments.

"There is no question of criticising our British friends. Nothing is further from our minds."

EASE THE SHOCK

In their first session of the summit, leaders agreed in principle on a set of concessions to Ireland enabling Dublin to hold a second referendum by next November on the Lisbon treaty, intended to streamline EU decision making. The treaty was rejected at a first poll and needs approval from all states. [ID:nLB555856]

"There was no opposition, there was no objection, there was no veto," one European official said. Another stressed that the agreement was only provisional and there would be talks on the details of the arrangements on Friday.

The Lisbon Treaty -- successor to the defunct EU constitution -- aims to streamline EU decision-making and give the bloc more weight in the world by creating a long-term president figure and its own foreign policy supremo.

EU leaders aim to agree how to reach targets of slashing carbon emissions by 20 percent by 2020 and winning 20 percent of the bloc's energy from renewable sources such as wind and solar power by that date ahead of global talks next year on a successor to the Kyoto agreement from 2012. (Additional reporting by Marcin Grajewski and Pete Harrison in Brussels and Markus Wacket in Berlin, Dublin, London and Rome bureaus; editing by Ralph Boulton)