"We will find an agreement" on the package, French President Nicolas Sarkozy told journalists yesterday (15 October) in Brussels following a dinner of the EU's 27 heads of state and government organised as part of the 15-16 October European summit.
The "environmental question is absolutely essential" and reaching a deal at EU level is an "historic responsibility", said Sarkozy, whose country currently holds the six-month rotating EU presidency. Paris has made reaching a deal on the package a top priority of its busy presidency.
Quelling the rebellion
But agreeing upon the large package over the next six weeks is likely to involve significant compromises and concessions in order to secure the support of member states concerned about imposing further costs on their industries and economies, particularly in the context of a recession.
A group of eight Eastern European member states – Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia – want to receive greater recognition for efforts made to reduce CO2 emissions
"The vast majority of the EU-27's greenhouse gas emissions reductions have been achieved by less affluent member states at a very high social and economic cost and it should be recognised," the group said in a communiqué circulated during the summit. And any EU climate deal "should respect the differences of member states' economic potential," the group said.
Italian Prime Minister Silvio Berlusconi has also repeatedly spoken out in opposition to the EU's climate plans on the grounds that they could further strangle his country's economy, whose traditional domestic manufacturing base has been hard hit by third-country competition.
While it remains unclear what kind of deal could be adopted to secure the support of these member states, the French EU Presidency has repeatedly mentioned the use of 'flexibility' as a means of forging consensus.
Financial transfers from wealthy to poor member states in exchange for emissions reductions could be used as a means for some of the richer EU-15 member states to 'buy' CO2 reductions while guaranteeing the 'solidarity' of former Soviet-bloc states.
"In order to make it easier to achieve the national targets defined in the Effort-Sharing Decision, member states will have to be authorised to defer from one year to the next a sufficient proportion of expected annual reductions and to trade emission rights amongst themselves," according to guidelines on energy and climate policy included in the draft summit conclusions prepared by the French EU Presidency.
Developed states already purchase emissions reductions credits in third countries through the existing Joint Implementation and Clean Development Mechanisms (JI/CDM) enshrined in the Kyoto Protocol, and most member states support a significant extension of this system as part of the climate package. MEPs and green groups are wary, however, that overuse of external credits could undermine EU domestic efforts while producing few verifiable emissions reductions abroad.
Meanwhile, exemptions from the EU ETS for certain industrial sectors are also likely to be part of any compromise. But the timeline for identifying sectors that could receive 100% free emissions allowances remains the subject of dispute between the Commission, Parliament and Council. Member states want an early identification of sectors in 2009, while the Commission and Parliament argue that global climate talks need to wrap up before any sectors can be singled out.