BRUSSELS, Belgium (AP) -- European companies will be able to gain a permit to pollute at home if they invest in projects that cut greenhouse gas emissions elsewhere in the world by December, the European Commission said Wednesday.
Businesses in the European Union, such as power generation companies and steel makers, will be able to support CO2-reduction projects in developing countries in return for credits in the EU's carbon trading program, the commission said.
They can sell on these permits if they don't need them -- giving them a financial incentive to become cleaner.
The EU's emissions trading plan will link up with a United Nations Kyoto Protocol program before December at the latest, the commission said.
The U.N. Kyoto Protocol allows rich nations to offset some of their greenhouse gas emissions if they pay for projects to reduce carbon dioxide releases in poorer countries. These can range from tree-planting to replacing polluting coal-fired power plants with cleaner alternatives.
Carbon trading is at the heart of the European Union's push to cut carbon dioxide emissions by a fifth by 2020, a move it acknowledges will burden the economy with costs -- although it says these will be easier to bear than the full impact of climate change.
Most industrialized countries -- except the United States and Australia -- have committed to cutting their output of carbon dioxide and other heat-trapping gases to below 1990 levels by 2012. China, India and other developing economies are exempt.