Brussels - European Union leaders are heading for a deal on making a pledge to cut greenhouse-gas emissions legally binding, Italian Prime Minister Silvio Berlusconi said Thursday.

But the proposed compromise would be disastrous for world efforts to stop global warming, seriously damaging the EU's own credibility, environmental group WWF said in a statement.

"We are heading towards a deal. Italy is obtaining everything it requested," Berlusconi told journalists on the fringes of the EU's year-end summit in Brussels.

In particular, the EU's fourth-largest state has won assurances that the bloc will protect industries which might face competition from countries with less-strict climate laws, and will allow member states to take more credit for supporting emissions-reduction projects in developing countries, he said.

The EU has also pledged to review its climate-change policies if world powers reach a deal on fighting global warming in Copenhagen in December 2009, and to put more money into experimental power stations that pump their greenhouse gases underground, Berlusconi said.

EU leaders are currently debating a set of laws aimed at cutting the bloc's emissions of carbon dioxide (CO2, the gas most linked with global warming) to 20 per cent below
1990 levels by 2020, in line with a pledge they made in March 2007.

On Thursday morning, the French government, which currently holds the EU's rotating presidency, set out a compromise proposal offering concessions to all the package's key critics.

Diplomats said that the compromise was well received by most member states, with one EU source telling Deutsche Presse-Agentur dpa that the atmosphere in the first round of talks had been "better than expected."

But WWF expressed dismay at the proposal, saying that it was "abysmal" and would reduce emissions "significantly less than the proclaimed 20-per-cent target by 2020."

And observers warn that the proposal weakens the laws so much that it runs the risk of rejection in the European Parliament, which is set to have the final say on the package on Wednesday.

Officials say that the French presidency will now draft a fresh compromise, based on the first round of talks, which heads of state and government will be expected to discuss on Friday. (dpa)