European Union leaders have unanimously agreed a deal on tackling climate change, which would see EU greenhouse-gas emissions drop to 20% below 1990 levels by 2020.

Nine eastern European countries had threatened to veto the deal over the proposal to auction off emission permits. Until now, European nations were given a certain number of permits to emit greenhouse gases. Under the next phase of the European trading scheme, the permits were to be auctioned off to the highest bidders, providing an extra incentive for reducing emissions.

The eastern European nations worry that auctioning would cripple their industry, which relies heavily on coal - the most polluting fossil fuel.

Under the final agreement, coal-dependent nations with low GDP per capita will get free permits equal to up to 70% of their current average annual emissions. This "privilege" will cease in 2020.

These companies will also be able to import a higher portion of cheaper emissions offsets from developing countries to help meet EU targets.

The leaders also agreed to earmark 300 million permits - worth between 4.5 billion and 6 billion euros - for carbon capture and storage technology.

Without high-level agreement, the European trading scheme, which underpins the first international carbon-trading market, risked stalling and carbon traders were relieved at the outcome of this week’s summit.
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