Climate Change: Eu Leaders Close to Emissions Deal

European leaders appeared close to a compromise deal to cut carbon emissions on the second day of a climate change summit in Brussels.

The German chancellor, Angela Merkel, expressed hope that the agreement would be reached.

"I am cautiously optimistic that we will manage to have a good result that can send a good signal to the Poznan climate conference," Merkel told Reuters, referring to parallel UN talks being hosted in Poland.

The Swedish prime minister, Frederik Reinfeldt, suggested a EU deal could galvanize the Poznan talks.

"I came from Poznan so I know that they are actually sitting and waiting for a European response," he said.

But several eastern European nations, including coal-dependent Poland and Hungary, are resisting a deal to cut emissions by 20% by 2020.

The Dutch prime minister, Jan Peter Balkenende, told reporters that those two nations took a hard line against a plan under which EU governments would share the burden of slashing industrial pollution.

Diplomats suggested giving eastern European countries a "solidarity fund" drawn from some of the money polluting companies will have to pay for permits that allow them to release large amounts of carbon dioxide.

But Reinfeldt warned that there was a limit to how much financing richer countries could fork out and that they would not accept any dilution of the goals the EU set last year.

"We are still talking of a 20% reduction of emissions by 2020," he told reporters.

Balkenende echoed this: "Especially now that there will be a new US administration we have an historic opportunity to reduce greenhouse gases."

Merkel said the EU's biggest economic power wanted an unequivocal commitment to the plan despite the economic downturn.

A draft agreement, seen by Reuters, said eastern European nations would be offered billions of euros to help to tackle climate change and modernize their power-generating industries.