Germany wasn't the first country to hand in plans for curbing carbon dioxide (CO2) emissions to the European Commission -- that honor went to Finland. But Berlin wasn't far behind. Considering the deeply entrenched dispute between industry and environmental groups, the fact that Europe's largest producer of greenhouse gases was among the first three to send its proposals for cutting the pollutants is surprising.

It wasn't clear until late Monday evening whether Germany would be in a position to make Wednesday's EU deadline for emissions reductions plans. Only after Chancellor Gerhard Schröder stepped in to broker a last-minute deal between the environment and economics ministers, was Berlin able to put together a proposal worthy of sending to Brussels.

Germany calls for slight reduction

Just hours before the EU deadline ran out, Germany's cabinet passed a plan to cut industrial emissions of CO2 from 505 million to 503 million tons per year by 2007. In a second phase, emissions are set to be limited to 495 million tons by 2012. The carbon caps are part of Germany's strategy to cut its greenhouse gases by 21 percent of 1990 levels by 2008-2012.

The reduction is only slight compared to the 488 million tons requested by Environment Minister Jürgen Trittin. As a member of the Green Party, the junior partner in the governing coalition, he had pushed hard for further emission reductions, arguing German industry needed to do more to fulfil its contribution to the Kyoto Protocol.

Economics Minister Wolfgang Clement, a member of Schröder's Social Democratic Party (SPD), unflinchingly resisted major emissions cuts. Further reduction requirements would put an undue burden on industry at a time when it is trying to shake off economic stagnation, he insisted.

European goal

The dispute between industry and environment is not unique to Germany. Throughout the European Union, member states are struggling to lay such disagreements to rest in order to submit plans for cutting emissions.

By midnight Wednesday all 15 EU states must set their CO2 limits and the distribution of reductions between industrial sectors, with ceilings set on a company-by-company basis. The reductions are part of a two-prong strategy Brussels has devised in order to meet its commitments to the Kyoto Protocol. In addition to capping emissions from industry and utilities, the EU plans to launch an emissions trading system (ETS) in January that would allow companies to buy and sell pollution "credits" from one another.

Companies exceeding prescribed CO2 emissions limit could buy credits from those who have remained under their pollution cap and thus create an exchange across borders, where the greener industries would stand to profit economically through the sale of their credits.

According to Norwegian research firm Point Carbon, emissions trading is estimated to reach $10 billion a year by 2007.

Several major industrial states, including Britain, France and Belgium, have already said they will miss the March 31 deadline. Italy, too, has conceded it is uncertain whether it will have a list of its emissions limits ready by the EU deadline. Spain will ask the European Commission for "understanding" for failing to meet the deadline as the country is undergoing a change of government.

"The picture we have today doesn't say that January 1 (the start of ETS) is in any danger -- not at all, not yet," Ewa Hedlund, the commission's environment spokeswoman, told a news briefing.

"Next week, we'll have more detail on what we've received and what action we are going to take," she said referring to a possible "infringement letter" from the commission and impending legal action against those members who fail to supply the EU executive with their emissions plans.

Waiting for Germany?

According to analysts, Europe's biggest polluters had held back on submitting their plans until Germany handed over its limits. As the largest producer of CO2 emissions, Germany's reduction rate dominated discussion in several capitals.

"Germany is important," John Molloy of the brokerage firm TFS in London told German wire service dpa. "Great Britain was the strictest up until now in terms of restriction, but they can't hold onto that position when everyone else is more lenient and risk jeopardizing the British industry."

Britain has denied it had purposefully waited for a German decision before drawing up its own plans. But on Tuesday London announced it may impose less cuts on industry than slated in January -- a reduction of 20 percent by 2010 -- and return to a limit closer to the 16 percent committed to under the Kyoto Protocol.