Cost row threatens EU climate strategy

EU plans to fight climate change were in danger of collapse today in a row over the cost.

Tensions flared at a dinner for European leaders in Brussels when Italy and Poland threatened to veto the policy for being too costly during an economic recession.

Summit chairman Nicolas Sarkozy angrily accused the two nations of using the credit crunch as an excuse to avoid the expense. "Let's not hide behind the crisis," the French president said. "Global warming is there whether there's a financial crisis or not." But Italian prime minister Silvio Berlusconi warned: "I am ready to use our veto powers. Our companies are in no state to take on costs like those we thought about last year."

Italy's decision to join a protest mounted by eight former communist states including Poland, Hungary and Romania, which are struggling to modernise heavy industries, raised the prospect of the green plan being badly watered down when formal decisions are taken in December.

Under the blueprint, Europe would cut its carbon emissions by 20 per cent by 2020 and introduce a complex system of CO2 permits that could be traded to reward polluters who go green. In addition, the plan calls for 20 per cent of energy to be switched to renewable sources and a 20 per cent cut in energy use through efficiency measures.

Mr Sarkozy, who sees the plan as a flagship of France's tenure of the EU presidency, said Europe would be humiliated if it backed away from a strict timetable. "If Europe wants to carry weight in the world, then we have to do it," he warned. "The crisis should not lower our ambitions."

He was strongly backed by Gordon Brown, who argued that spending on improvements like home insulation created jobs and would help countries survive the downturn.

Today's summit conclusions were expected to endorse the targets but leave vague how they would be met.