UK says supports EU climate plan despite recession

LONDON (Reuters) - Britain supports the European Union's tough climate change proposals even as Europe falls into recession, the UK minister of state for energy and climate change told a conference on Tuesday.

"We do not believe the global economic downturn justifies postponing action on climate change until stability returns," Mike O'Brien said.

"The case for strong and early action remains robust under the current economic situation."

The EU Commission's climate change and energy package tabled in January, dubbed "20/20/20 by 2020," seeks to reduce European carbon dioxide emissions by 20 percent from 1990 levels by 2020, to increase energy efficiency by 20 percent and to source 20 percent of power from renewable energy like wind or solar.

The plan bolsters the 27-nation bloc's Emissions Trading Scheme by calling for an increase in the number of emissions permits to be auctioned to industry from 2013, including full auctioning to power generators.

Italian Prime Minister Silvio Berlusconi shocked other EU leaders at a summit last month by unexpectedly threatening to veto the plan unless its concerns about the impact on domestic industry were met.

Italy's employers lobby, Confindustria, has the plan will cost the country up to 27 billion euros ($34.76 billion). The EU Commission has estimated Italy's cost at less than one-half of that amount.

Poland and six other European Union newcomers also oppose the plan, saying it is too costly for their industries.

"The UK is strongly resisting any suggestions that the package should be delayed or watered down," O'Brien said, adding that some of the other member states had been "doom mongering."

Much of Eastern Europe relies on carbon-intensive coal for power generation, meaning coal plants will be forced to buy all of their emissions permits under full auctioning.

"We believe auctioning is better than free allocation, because it strengthens incentives to reduce emissions and reduces windfall profits among companies. We want 100 percent auctioning by 2013," O'Brien told the conference, hosted by Marketforce and the Institute of Economic Affairs.

Britain held its first permit auction last week, raising more than 80 million pounds ($120.9 million) for government coffers.

The country will auction 7 percent of its permits between 2008-2012, including 25 million in 2009. (Reporting by Michael Szabo; Editing by Karen Foster)