European leaders are set to agree to cut greenhouse gases by a fifth, hoping that the tough and binding target will set an example for a global post Kyoto settlement.

But behind today’s expected agreement European leaders are bitterly divided over how to share the burden of reducing harmful emissions.

They also face a backlash from business, which is warning that unilateral goals will hasten the international decline of European industry.

In an east-west split between new and old members, Poland and the Czech Republic were at loggerheads with Germany, Britain and Italy.

Those three countries were leading the push for a binding agreement that 20 per cent of all Europe’s energy should come from renewable sources — such as wind, wave and solar power — by 2020.

President Chirac of France, in his last Brussels summit, was also opposing the 20 per cent renewables target. He was demanding that it be broadened into a “noncarbon” target — to reflect France’s heavy reliance on nuclear generation.

Chancellor Merkel, a former Environment Minister and the current holder of the EU’s revolving presidency, yesterday implored her fellow EU leaders to give her a strong hand at Germany’s G8 meeting in June, when she will appeal to world leaders to join a postKyoto framework.

The European leaders will today back a mandatory overall cut in the EU’s CO2 emission of 20 per cent by 2020, based on 1990 levels. They could increase that to 30 per cent if other key international players follow suit.

Mrs Merkel, predicting “very difficult negotiations” continuing today, said: “We have got to go for a sensible solution for the right policy mix which will ultimately deliver results for our grandchildren.”

She added: “We have got to think outside the box but we have got to be realistic as well.”

Business leaders expressed grave disquiet at the new regulations they could face. Ernest-Antoine Seilliere, the head of the BusinessEurope employers’ group, said: “In terms of binding obligations on renewables, nobody has the foggiest idea what the costs can be.”

Britain backed the call for a binding target of 20 per cent renewable energy despite only achieving 1.6 per cent in 2005. Tony Blair told the summit that the new targets would not be a burden on business but an incentive to change direction to meet future global demands.

His spokesman said: “The certainty that you are going to have to deal with that issue gives countries knowledge that they are going to have to work to achieve that goal and gives then the incentive to invest in that.”

He added: “This should be Europe taking a very serious step on energy and climate change and in turn will give Europe the right to claim leadership in the run-up to the G8-plus-5.”

Despite some misgivings over the technology involved, the EU leaders are also set to agree a binding target — probably for each nation — that biofeuls should make up at least 10 per cent of its fuel use by 2020.

A caveat will be inserted that this could be relaxed if sustainable sources of biofuels, which are refined from crops such as sugar cane, do not emerge in time.

Mr Blair was busy in the margins of the summit canvassing support from EU leaders for extra help in Afganistan, either through manpower or lifting the caveats which restricted existing troops from being deployed in hostile situations.

2020 goals

20% cut in CO2 emissions across the EU

In favour: Germany, Britain and other “old” EU countries

Against: Poland

Poland anxious that the burden should not fall on all nations irrespective of economic progress

20% of energy to come from renewables

In favour: Germany, Britain, Denmark, Sweden, Italy

Against: France, Poland, Czech Republic, Slovakia

France seeking broader noncarbon target to take account of its large nuclear capacity. Eastern countries say their economies are not ready for that, and some landlocked nations say they do not have the capacity

10% of all EU fuel plant-based, such as ethanol

In favour: Germany and Sweden

Against: Czech Republic

Former Iron Curtain countries do not want to return to the days of centrally imposed targets and five-year plans

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