The directive will now take effect in January 2005 rather than 2008 which is the target for the protocol.

PES Group shadow rapporteur David Bowe said: “This sends a clear signal to countries around the world that the Kyoto Protocol is not dead and the European Parliament demands practical action to make it a concrete reality.”

The reduction of CO2 emissions in the member states will take place through national plans and also the Kyoto mechanisms: emissions trading, Joint Implementation (JI) and the Clean Development Mechanism (CDM). By stimulating the demand for JI credits, EU companies will invest in the development and transfer of new technology. Developing countries hosting CDM projects will be assisted in achieving their goals.

Mr Bowe welcomed the setting of credit limits: “This allows member states to monitor and control the market, while measuring the number of credits actually used can give certainty to industry and ensure that multinationals do not bank their credits for use in large, less environmentally-friendly projects at a later date.

“On the so-called forest ‘sinks’, we have been able to get a prohibition on the use of credits until at least 2008. I suspect that sinks will only be a temporary solution to the CO2 problem but we should remain open to developing scientific evidence.

“On large hydro-electricity projects, we were in favour of excluding them permanently but we have ensured that projects undertaken within the European scheme are at least in line with Kyoto, the World Commission on Dams and the Marrakech Accords.

“Our message to EU governments is clear: Real environmental improvement through emissions reductions must be achieved by long-term, sustainable effort at home and not by cheap, ill-advised and potentially catastrophic projects in poorer countries.”

• George Vella has been nominated to form part of the PES presidency, and not to become PES president. The post of president is being contested by Giuliano Amato and Paul Rasmussen.