EU lawmakers vote to save factories from carbon cost

BRUSSELS (Reuters) - Influential EU lawmakers sought in a key vote on Tuesday to ease the cost for factories of meeting greenhouse gas emissions limits from 2013 as much of Europe heads for recession.

But the European Parliament's environment committee backed an EU executive Commission plan to wipe out utility windfall profits from carbon trading and transfer up to 30 billion euros ($40.76 billion) to member state coffers.

Factories and power plants participating in the EU emissions trading scheme (ETS) get most of their carbon permits free now.

The committee backed a phased-in approach for energy-intensive sectors vulnerable to competition, and staring at a global economic slowdown to pay for just from 15 percent of carbon permits in 2013 rising to 100 percent in 2020.

"The clear political message from us to the (EU executive) Commission is we want these energy-intensive industries looked after," Avril Doyle, the MEP steering EU ETS legislation for the European Parliament, told Reuters.

Tuesday's vote set the legislature's position in energy and climate negotiations with EU leaders ahead of a final agreement expected later this year or early in 2009.

"The greens weren't very happy and those on the side of industry weren't very happy, so I reckon I got it somewhere right in the middle," Doyle added.

The panel backed full auctioning for power plants from 2013, meaning generators would have to pay for every metric ton of carbon dioxide emissions, a move likely to dent coal plant profits.

"One hundred percent auctioning for power generators was not contested here at all," said Doyle.

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

Coal-dependent Poland has tried to assemble a blocking minority to delay adoption of the step.

Climate change could cause more heatwaves, floods, droughts and higher sea levels, the U.N. Climate Panel says.

SILVER BULLET

In a surprise move, the EU lawmakers backed billions of euros of aid to fit carbon capture technology to power plants, in what would be the world's biggest backing for a fix many scientists see as the nearest thing to a climate silver bullet.

The European Parliament member in charge of legislation on carbon capture and storage (CCS), Chris Davies, has previously estimated that could raise up to 10 billion euros ($13.59 billion) to fund 10 to 12 CCS test plants by 2015.

The EU lawmakers also threw the spotlight on more domestic action to fight climate change, cutting import limits on carbon offsets from developing countries through 2020.

Carbon offsets are generated from funding emissions cuts in developing nations, for example through projects to improve energy efficiency or destroy greenhouse gases, and are a cheaper alternative from doing the same in Europe.

The panel vote cut the cap on industry imports of offsets compared to the European Commission's proposals in January, a Commission spokeswoman said. But Doyle said that "I was prepared to be more generous than the Commission's proposal."

The lawmakers also backed more domestic climate action by member states, voting to cut their import limits, too.

(Additional reporting by Nina Chestney and Dan Fineren in London; writing by Gerard Wynn; editing by James Jukwey)