Trade Battles Buffet E.U.'s Green Efforts BRUSSELS - During the past decade, the European Union blazed a green trail with a series of laws mandating a low-carbon economy and promises to set an example for other parts of the world. That now seems like another era. A succession of economic crises has pushed European governments to pare subsidies to clean-energy sectors like solar power and has undermined initiatives in other areas like energy efficiency, where member states balked at binding targets. The E.U. Emissions Trading System - the Union's flagship climate policy, which requires industries to acquire emissions permits - has been battered by extreme volatility, tax fraud, recycling of used credits, suspicions of profiteering and online attacks. Many factories and utilities also received more free permits than they needed under the system, helping ensure that the price of the permits has never been high enough, for long enough, to push polluters to invest in cleaner alternatives. The latest complication for Europe's green agenda is the prospect of trade wars with important partners like the United States and China at a time when the Union can least afford threats to jobs and growth. The most high-profile dispute focuses on a law requiring all airlines using airports within the Union to join the Emissions Trading System. About 30 governments met in Moscow this week to discuss barring their carriers from participating and other forms of retaliation. There are other disputes brewing. One of the most sensitive issues is expected to come to the fore Thursday, when representatives from E.U. member states are to vote on measures that would label fuel produced from tar sands more polluting than fuel from other forms of oil. Identifying the most emissions-intensive fuels could limit exports from tar sands to Europe - a prospect that has infuriated officials in Canada, which has some of the world's largest proven oil reserves in the form of tar sands. Ottawa has been lobbying to thwart the initiative, and Canadian officials have warned of retaliation. The European initiative also threatens to increase tensions with Venezuela, which has extensive tar sand deposits. The vote Thursday could end in deadlock if governments from influential member states decide to oppose the measure or abstain because of concerns about how to implement the rules or out of a desire to protect oil companies like BP of Britain, Total of France and the British-Dutch company Shell, which have already invested in tar sands. But that would not be the end of the matter. Discussions would continue among E.U. governments. The European Commission - the E.U. executive body, which wrote the rules on tar sands - could end up endorsing the measures. "It is only reasonable to give high values to more-polluting products than to less-polluting products," Connie Hedegaard, the E.U. climate commissioner, said this week. A rating system for fuels is an "environmentally sound initiative," she said. Europe's goal of cleaning up transportation fuels is also behind tensions with Malaysia and Indonesia, major producers of palm oil, which is used as a feedstock for biodiesel. During the past 10 years, the Union has expanded its use of biofuels from oily crops like palms as an environmentally friendly alternative to fossil fuels. That has created additional markets for Southeast Asian growers. But it has also led to an outcry from scientists and land-use experts who say that fuels based on palm oil release more carbon dioxide than originally thought because of factors like deforestation. The commission has developed a certification system, and it now is considering additional criteria to curb a phenomenon known as indirect land use change, in which areas containing high stores of carbon - like grasslands, peat lands or forests - are cleared to replace food production lost to biofuel crops. The additional criteria would dampen trade with Southeast Asia by preventing many fuels based on palm oil from counting toward European targets for biofuels. The issue could intensify, especially if the Malaysians and Indonesians see the criteria as discriminatory trade barriers favoring European farmers, who grow their own biodiesel crops, like rapeseed. There are also frictions over fuels with the United States. Three years ago, the Union imposed duties affecting American biodiesel producers after complaints by European producers that the U.S. government had given production subsidies. Last year, after complaints by ePure, a European industry association, the commission started two new inquiries into the way the United States supports its bioethanol industry. A decision on provisional duties is expected in August. One of the most explosive issues Europe may soon face is whether to protect its solar industry from Chinese manufacturers. SolarWorld - a German company that has filed a complaint with the U.S. authorities accusing China of giving its solar industry anti-competitive subsidies and selling products at unfairly low prices - said this month that it was "still in the preparation phase of a complaint" in the Union but declined to comment further on the timing. Such a case would face determined opposition from China and companies with major stakes in Chinese exports. Some of those companies have already mounted a pre-emptive campaign against any action that could result in European duties. Canadian Solar - which is based in Ontario and uses factories in China to produce many of the panels it sells in Europe - has warned that duties would benefit only a small group of manufacturers. It says the vast majority of jobs in the solar industry in Europe involve installation and maintenance, or supplying of materials and equipment to panel makers in other countries. Some European governments have already begun taking matters into their own hands. This month, Nathalie Kosciusko-Morizet, the French environment minister, announced that solar plants using at least 60 percent European-made equipment would earn a premium of about 10 percent on electricity sales. Italy has already put a similar system in place, allowing solar power producers to claim a bonus when they use equipment like transformers and panels made in the Union.