The European Commission sharpened its main weapon for fighting climate change today, demanding across-the-board cuts in European Union states' greenhouse gas emissions plans for 2008-2012.
The decision provoked an angry response from Germany, the EU's biggest polluter. Economy Minister Michael Glos said it was "totally unacceptable" and would push up electricity prices.
France withdrew its plan at the last minute after indications it too faced rejection.
Only Britain's carbon dioxide emissions cap was accepted by the Commission. "I think that with today's decisions the European Union will affirm its leadership role in fighting climate change and also our strong commitment to achieving the Kyoto Protocol targets," Environment Commissioner Stavros Dimas told a news conference.
The EU has struggled to contain greenhouse gas emissions, which rose in 2004, and the bloc's "old" 15 members are only narrowly on course to meet their Kyoto Protocol target.
Its emissions trading scheme, launched last year, is at the heart of EU efforts to meet Kyoto targets by capping emissions of carbon dioxide from heavy industry. Its success or failure may determine climate change policies around the globe.
The scheme's first phase from 2005-2007 came close to collapse when 2005 data showed governments gave industry more emissions permits than needed and carbon prices crashed. The Commission tried to restore lost credibility on Wednesday, demanding a nearly seven percent cut in the total allowance that 10 EU countries proposed for 2008-2012.
The 10, including Germany, accounted for 42 per cent of total allowances in the first phase. The Commission has yet to rule on plans submitted by other EU member states.
"The second allocation process in the European Union emissions trading system is a credibility test for Europe and I'm confident that we have mastered the test," Mr Dimas said.