EU leaders focus on climate deal
There is concern that the climate deal may be undermined by compromises
Leaders of the European Union are said to be close to a compromise agreement on how to achieve ambitious targets to fight global warming.
They are attempting to agree a mechanism whereby the EU could cut carbon emissions by 20% by 2020.
They have also agreed in principle a 200bn-euro economic stimulus package.
Earlier, EU members reportedly agreed a series of concessions to the Irish Republic enabling it to hold a second referendum on the Lisbon reform treaty.
Dublin's rejection of the treaty in June stalled the project, which is aimed at simplifying decision-making in the 27-member bloc.
At the end of a first day of talks at the summit in Brussels, EU leaders moved closer towards agreement on the so-called "20-20-20" package to tackle climate change after concessions were made to limit its impact on struggling industries.
Some EU countries want auctions of pollution permits delayed
The measures, which also require approval by the European Parliament to become law, would commit the EU to cutting carbon dioxide (CO2) emissions by 20% by 2020, compared to 1990 levels, and to raising renewable sources to 20% of total energy use.
The talks are going on concurrently with a UN climate conference in Poznan, Poland, where former US presidential candidate John Kerry said the United States was set to lead the world towards a new climate deal.
Mr Kerry, who is representing President-elect Barack Obama, said the aim of agreeing a deal by next year must remain on track.
'Heading for compromise'
The BBC's Jonny Dymond, in Brussels, says an EU deal seems to be coming, but there were some very long faces as the summit broke up on Thursday night.
EU 20-20-20 TARGETS
20% cut in greenhouse gas emissions by 2020
20% increase in use of renewable energy by 2020
20% cut in energy consumption through improved energy efficiency by 2020
There is concern in some quarters that the compromise proposed has led to the overall aim of the package being undermined.
East European nations will be handed extra carbon credits free of charge, and industries in western Europe will get huge sweeteners which reduce the cost of cutting emissions - but there are still disputes over how many credits and to how many industries.
What is more, billions of pounds will be lost from green good causes because governments will auction fewer permits, so raising less cash. And the carbon price will be depressed because so many free credits have been offered - this will act as a deterrent for firms to invest in clean technology.
Speaking off the record, a UK source said they were very unhappy with the current proposals, and too much had been given away - particularly to German industry.
BBC environment analyst Roger Harrabin, who is at the Poznan talks, said that from the point of view of UN climate delegates, the crucial message from Brussels was for the EU to stick to its headline 20% commitment.
But the concessions made to industry will damage Europe's image among developing countries - and will have an impact on a future global climate deal, he said.
Another contentious area is the EU's plan to allow countries to buy cheap carbon credits from poor nations rather than cutting emissions at home.
If we fail to reach an agreement at this summit, it will be disastrous for climate negotiations next year
Danish PM Anders Fogh Rasmussen
The environment group WWF told BBC News that their calculations suggested that many sectors of the economy would be able, under current proposals, to buy 60-70% of their credits abroad. The group said this would undermine Europe's drive towards a low-carbon economy.
A new formal proposal was to be issued by the French presidency before the meeting broke for the night. Leaders will then return with their reaction in the morning.
At the start of the discussions on Thursday, French President Nicolas Sarkozy said he hoped his fellow leaders would be able to unite on a climate package.
"Europe must not provide the spectacle of its own division," he said.
Danish Prime Minister Anders Fogh Rasmussen warned that a successful EU deal was vital to persuade other major greenhouse gas emitters to agree to cuts at the UN Climate Change Conference in Copenhagen next year.
Economy deal 'agreed'
Also discussed at Thursday's meeting was the EU's proposed 200bn-euro (£175bn) "fiscal stimulus", equivalent to 1.5% of the bloc's projected gross domestic product (GDP).
Belgian Prime Minister Yves Leterme said a deal had been agreed "in principle" and that EU leaders would finalise a text on Friday.
Italy's Prime Minister Berlusconi also said a broad agreement had been reached.
The proposed fiscal stimulus would seek to boost employment and growth, and would involve everything from tax cuts to investment strategies, while taking account of differences between the economies of each member state.