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The president of the European Union has outlined specific, binding national targets for European countries to reduce carbon emissions and use more renewable sources of power.

But the targets might also put Europe on a collision course with the US and emerging economies that are less than committed to reducing their emissions and prickly about anything that smacks of protectionism.

Jose Manuel Durao Barroso told the European Parliament that although the plans would cost every European citizen about €3 a week, this was far cheaper than even the lowest estimates of the Stern Report.

Barroso reiterated the 20/20/20 targets - a 20 per cent increase in energy efficiency, a 20 per cent cut in greenhouse gas emmissions and a 20 per cent target for renewable sources as a share of total EU energy use. He also called for an updated Emissions Trading System (ETS). Big polluters will be able to use the ETS to trade across national borders.

He said targets were vital to show investors and citizens the issue was being taken seriously. The measures would also be fair he claimed - different countries have very different targets to hit in order to contribute to a pan-European target of 20 per cent - and must minimise the impact on the European economy. The UK must source 15 per cent of energy from renewable sources by 2020.

Barroso emphasised that the move to renewables was an opportunity for European businesses, not just a cost. He believes that Europe can have a leading role in this new industry, and predicts renewables will provide one million jobs by 2020.

The target remains for a 20 per cent cut in greenhouse gas emissions by 2020, but with willingness to go to 30 per cent if there is international agreement.

Reacting to the recent debate over the role of biofuels in meeting the targets European targets, Barroso said the previously stated target to derive ten per cent of road fuel from biofuel remained but the EU was committed to certifying biofuels to ensure they were environmentally sustainable.

But the announcement raised fears of a possible trade war with the US and China. European companies will not be able to compete if they have to pay emissions charges which US and Chinese competitors are excluded from. So European countries will need to impose tariffs on energy-intensive products - whether produced by Chinese firms or by European companies which have offshored production in order to avoid European regulations.

The first ground for battle is likely to be on biofuels. The European Union is trying to improve biofuel's environmental credibility by forcing companies to reveal the true environmental cost of their production - Indonesian suppliers relying on destroying virgin forest are likely to lose out. Separately the EU is also likely to impose tariffs on biofuel imported from the US because it also fails to cut carbon emissions and receives generous tax breaks from the US government.

The speech is available here.

Greenpeace welcomed what it called "achievable targets". The lobby group reckons that the UK's target of 15 per cent target for overall energy use equates to finding 40 per cent of our electricity from renewable sources like wind, tide or solar. The UK currently produces two per cent of its energy from renewable sources.

The group praised Gordon Brown for committing to the target but said: "We now need a completely new industrial policy to make this happen, supporting the engineers and business leaders who can make the target a reality."

Environment minister Hillary Benn said: "I support the clear message from the Commission that there should be much more auctioning in the EU ETS. We would like to see increasing minimum levels of auctioning that allow Member States to set higher levels unilaterally." ®

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