Heavy industry won extra time to go green yesterday as fears of factory closures during the economic crisis led Europe’s leaders to water down climate change proposals.

The EU stuck to its target to cut 20 per cent of greenhouse gases by 2020 and boost renewable energy, winning praise from John Kerry, Barack Obama’s envoy to a UN climate change summit in Poznan, Poland.

The goals are the world’s most ambitious and the EU hopes that Mr Obama will use them to steer the US towards a successor agreement to the Kyoto Protocol.

But big concessions for polluting industries such as steel and cement, under pressure from the German Government, led to accusations that yesterday’s EU summit in Brussels was a missed opportunity.

Plans to make all industries buy permits to emit pollution from 2013 onwards were deferred by EU leaders amid fears that these costs would cause job cuts and an exodus of production to countries with less stringent controls.

While electricity generators will have to buy their carbon permits the EU decided to hand free credits to key industries in a move that will reduce revenue for green measures such as developing carbon capture projects.

European industries exposed to international competition will receive free emissions permits if they face a 5 per cent increase in costs, a measure that is viewed as covering more than 90 per cent of EU industry. They will still have to reduce emissions year on year.

James Wilsdon, of the Royal Society, said that the EU climate change deal could represent “a missed opportunity” because of the way it had been watered down.

He said that too much attention had been paid to short-term economic considerations instead of the longer and more deadly problems of climate change.

“Europe must have a fully functioning Emissions Trading Scheme covering all sectors, where permits are not just given away. Those who cannot see beyond the short term must not hold sway – the consequences are too serious,” he said.

“Large-scale investment now in green technologies can reap long-term economic gains. A failure to invest in these will leave Europe dependent on others for our energy and increasingly vulnerable to the impacts of climate change.”

In the wide-ranging compromise deal struck by EU leaders, Britain won €3 billion (£2.6 billion) for extra investment in carbon capture and storage, taking the total to €9 billion. President Sarkozy of France, who chaired the EU summit, hailed the deal as seminal. “It is quite historic what has happened here. No continent has given itself such binding rules,” he said.

But Greenpeace, the WWF and other environmental groups denounced the agreement as “a dark day for European climate policy” despite the commitment to retain the headline target of 20 per cent CO2 cuts by 2020. “European heads of state and government have turned their backs on global efforts to fight climate change,” they said in a joint statement.

They accused the German, Italian and Polish leaders, plus Mr Sarkozy, of choosing “private profits of polluting industry over the will of European citizens, the future of their children and the plight of millions of people”.

Mr Kerry said that the EU’s overall agreement would serve as a blueprint for the rest of the world. He said that the deal would have an impact at talks planned for Copenhagen next December when world leaders will meet to try to seal an international accord to succeed the Kyoto Protocol.

Europe has been the driving force for getting a fresh pact to succeed Kyoto in 2013, but delays and disagreements on its own measures have damaged its reputation in recent weeks.

Its failure to sign off its climate change package until yesterday was one of the chief stumbling blocks at the Poznan summit, where other countries were reluctant to commit themselves to becoming low-carbon economies until wealthier nations acted. The global economic downturn has meant rich and poor nations have been less willing to spend money on reducing emissions of greenhouse gases.

Even though it was watered down, the accord served as a catalyst to break two weeks of deadlock at Poznan. Within hours of learning of the agreement, delegates moved towards releasing hundreds of millions of dollars to help poor nations protect themselves from the impact of climate change.

Negotiators in the Polish city agreed to release cash from the Adaptation Fund to poor nations where it will be used to help them cope with global warming. Mozaharul Alam, a delegate from Bangladesh, said: “This is an important step.”

As 145 ministers and 10,000 delegates prepared to head home they were addressed by Al Gore, the former US Vice-President who won the Nobel Peace Prize for his campaigning on climate change. He urged them to work to seal an accord in Copenhagen next year on reducing greenhouse gas emissions. It was clear that “increased CO2 emissions anywhere are a threat to the integrity of this planet’s climate balance everywhere”, Mr Gore said.

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