She hopes the other 26 EU member states' leaders will agree on cutting carbon dioxide (CO2) emissions by 20 percent by 2020, from 1990 levels, and by 30 percent if other developed and emerging economies, particularly China and India, join them.

A 20 percent cut would save 100 billion euros and some 780 million tonnes of CO2 a year, according to figures from the EU's executive Commission, keen to sell the issue as an economic as well as environmental winner.

However though the leaders may agree on those cuts, years of haggling lie ahead of how deep those cuts will go in each EU nation. Member states also remain deeply divided on issues such as the role of nuclear energy and setting binding targets for renewable energy sources.

They have some time, even if environmentalists warn that the clock is ticking, as the Kyoto Protocol sets out emission targets until 2012, but many EU states are struggling to meet them.

With temperatures, oil prices and the EU's dependency on overseas energy supplies increasing, "the status quo is not an option," EU Commission chief Jose Manuel Barroso warned Tuesday, describing the CO2 reduction plan as "the most ambitious commitment ever made to tackle climate change."

The bloc spews out some 14 percent of global greenhouse gas emissions, which most scientists agree cause higher temperatures and sea levels and are linked to intensified storm patterns.

British Prime Minister Tony Blair said in London that there was the "real possibility of showing how Europe can lead the debate on climate change, on energy security, and on deregulation in the interest of a more competitive European economy".

However EU foreign ministers were almost split down the middle, during talks here on Monday, on the issue of introducing a binding target of 20 percent for the use of renewable energy sources -- including wind, wave and solar power -- up from a present level of around seven percent.

France, Poland and the Baltic states oppose setting a mandatory target and want to leave it to member countries to choose their own approach to cutting emissions.

"It's not just a question of one or two countries being against... I wouldn't hold out any great hope that we are going to make a huge step forward" on renewables, a German source said.

The German EU presidency admits that strong economic forces are in play, not least because renewable energy does not come cheap.

Another contentious issue is the role of nuclear power in reducing carbon emissions.

The French government believes it has an important role to play while the idea is anathema to anti-nuclear nations such as Austria and Ireland.

Energy policy has climbed high on the EU's political agenda over the past year amid concerns about the reliability of Russia as a supplier of oil and gas.

The EU leaders hope that a strong message from their summit, largely dedicated to energy issues, will also push forward the green agenda at a summit of G8 industrialised nations leaders in Germany in June.

The 27 EU leaders will also discuss the thorny issue of "unbundling" Europe's giant energy companies -- splitting them into separate production and distribution entities -- although the Germans themselves are not championing that initiative.

Elsewhere on the summit agenda are talks on measures "to boost employment and reinforce the social dimension," said Merkel.

The EU leaders will also consider how to cut down on red tape, with the Commission keen to point out that most emanates from individual member states.

Over dinner on Thursday Merkel will present her ideas for a celebratory "Berlin Declaration" to be delivered in the German capital on March 25 to celebrate the 50th anniversary of the EU's founding treaty of Rome.

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