 European Union leaders will set a tight timetable this week for adopting ambitious energy policy reforms and measures to fight climate change despite some sharp differences over how to achieve those goals. They will also endorse calls for a global voluntary code of conduct for sovereign wealth funds and for more transparency in financial markets in response to the credit crisis which is set to crimp economic growth in Europe this year. At a summit on Thursday and Friday, the 27 leaders will pledge to agree by June on a liberalisation of the EU's energy market, and in December on steps to cut greenhouse gas emissions and promote renewable energy sources and biofuels, according to a draft statement seen by Reuters. They agreed last year to cut emissions by at least one-fifth by 2020 from 1990 levels, use 20 percent of renewables such as wind, solar, hydro and wave power in electricity output and 10 percent of biofuels from crops in transport by the same date. But there are still disputes over how to handle the needs of energy-intensive industries such as steel, cement and aluminium, how to cut carbon dioxide (CO2) emissions from cars and whether to break up Europe's big vertically integrated power companies. "The momentum cannot be allowed to slip. The timing of an agreement is critical to its success," European Commission President Jose Manuel Barroso said in a pre-summit address to the European Parliament on Wednesday. 
WARNING AGAINST PROTECTIONISM EU officials say they need a deal between member states and the European Parliament on the energy and climate change package at the latest by March 2009 to ensure Europe is in a strong position in global climate change negotiations next year. Failure to meet that deadline would delay EU legislation by at least nine months due to European elections in June 2009, weakening the bloc in U.N. talks with other major economies on curbing emissions at Copenhagen in November next year. Barroso rejected concerns by some lawmakers that the cost of EU measures to fight global warming may be so high as to drive heavy industry out of Europe, leaving an industrial wasteland. "It would be a crucial error to view the interests of European industry as being contrary to combating climate change," he said, pledging specific guarantees for energy-hungry industries. Barroso also warned the EU against turning to protectionism in reaction to the economic downturn, arguing that Europe was a huge winner from globalisation and remained the world's largest trading power despite the rise of China and India. "Europe needs to protect, but it must avoid the temptation of becoming protectionist. A retreat into protectionism would be madness," he declared. He did not name any country, but France has led recent efforts to prevent further concessions on agriculture in world trade talks and to demand a "green tariff" on imports from countries that do not meet EU environmental standards. French President Nicolas Sarkozy and German Chancellor Angela Merkel are expected to brief the summit on a plan to create a "Union for the Mediterranean" in July, which Paris has greatly watered down at Berlin's insistence. Diplomats in Paris said on Tuesday that France and Germany had settled their differences over the plan to create a new forum to promote trade and cooperation with the EU's southern neighbours.