In a statement, the French Presidency said Sarkozy and Merkel held a telephone conversation on Sunday (7 December) about "the issues on the agenda" for the next European summit on 11-12 December.
"On the energy/climate package, they confirmed their common will to come to an agreement at the European Council" in Brussels this week, the statement read, adding the talks were held "in a friendly context".
Solidarity fund
Sarkozy, who holds the EU's rotating six-month presidency, will travel to London today (8 December) to push for an agreement on a "solidarity fund" for Eastern and Central European states, whose economies are expected to suffer the most from the transition to a low-carbon economy.
The fund - a proposal originally put forward by the European Commission a year ago - would draw from sums collected from auctions under the EU's trading scheme for carbon dioxide (EU ETS). Under the proposal, up to 10% of the money collected from CO2 auctions would be redistributed to help poorer EU countries update to cleaner energy production.
But Poland is concerned that the fund would shrink to nothing if heavy industries covered by the EU ETS continue to receive their CO2 pollution permits for free after 2013.
Sectors such as cement, steel and chemicals are lobbying hard to continue receiving CO2 allocations for free when the scheme is tightened after 2013, claiming they will be driven out of business if they are requested to purchase them at auction. And Germany is under pressure to make concessions to them as it is home to a large number of heavy industries.
Sarkozy, who made reaching agreement on the climate change 'package' of legislation the top priority of his six-month EU presidency, met the leaders of nine Eastern European countries in Poland on Saturday (6 December). The fund was among the major topics of discussion.
"There is still a lot of work ahead of us," Tusk said after the talks, held in the Polish port of Gdańsk. In addition to Poland, the talks involved the leaders of Bulgaria, Hungary, Czech Republic, Slovakia, Romania, Estonia, Lithuania and Latvia.
Poland, which relies on coal for over 90% of its electricity, is concerned that the EU scheme would put its economy at risk by making power generation too expensive.
From 2013, only the electricity sector will be required to buy 100% its CO2 permits at auction. A phase-in is foreseen for other sectors. The extent of this phase-in is one of the major issues still under negotiation.
"Europe must be an example to others," Sarkozy said after the Gdańsk talks. "We have eight days left, and that is enough to negotiate an agreement," he said, according to Bloomberg.
