Rumours that an investment worth billions of euro might slip out of the hands of an investment-conscious country will always stir commotion and pose the question why.

When the Bulgarian Metalworking Industry Association warned, on June 18, that Austria's steel maker Voestalpine was likely to strike Bulgaria out and narrow the location search for a five billion euro metal works to Romania, Turkey and Ukraine, public attention focused on the reasons.

And the reasons are the same that prodded Bulgaria to send the European Commission (EC) to court for the first time ever.

Voestalpine had apparently worried over the planned substantive cut in Bulgaria's carbon emissions quotas. The probability that it had to buy allowances under the EU Emissions Trading Scheme (ETS) rather than use them for free would prove too costly to the Austrian processing company.

In a June 9 proposal for changes to the European Directive for trade in greenhouse gas emissions, the EC opted for a dramatic reduction of Bulgaria's allowances target for the 2013/20 period. Gauged against Bulgaria's baseline year 1988 under the Kyoto Protocol, the cut was 49 per cent.

Although Voestalpine's official disclaimer followed the day after, saying that a final decision was due only in September or October 2008, it had raised fears of an emerging threat to Bulgaria's investment appeal.

Also on June 18, Greek heavy industry group Viohalco said it would back out of a 400 million investment planned at its Pernik-based steel works Stomana Industry, already filed with the Government, if the EC quota cut was enacted, Dnevnik daily quoted Viohalco regional manager Anton Petrov as saying.

On the same day, the Bulgarian Industrial Association (BIA) issued a reasoned opinion contesting the EC proposal. It praised the decision of the Bulgarian Government to do likewise or else Bulgaria's economy stood to lose 300 million euro a year in each of the seven years up to 2020.

The row over 2013/20 is yet to unfold and will occur at a time when Bulgaria's case over carbon emissions for years 2007 and 2008/12 has procured a verdict. Yet it was only days before the EC unveiled the priorities under its January 23 2008 energy and climate package and this time Bulgaria is not playing solo.

A group of seven EU newcomers led by Hungary, challenged, on June 5, the EC proposal with European Parliament and filed a counter-proposal.

Hungary - together with Bulgaria, the three Baltic States, Romania and Slovakia - offered to discard the individual approach toward each country and set instead a uniform 18 per cent cut for all EU member states. Hungary argued that the EC methodology, which draws mainly on countries' economic strength and emissions in benchmark year 2005, was flawed as it failed to account for EU newcomers' past achievements. Most post-communist states, Hungary said, had suffered a severe economic downturn in the years of transition and were yet to catch up with pre-change levels. Hence, GDP and emissions levels in 2005 failed to reflect past achievements and factor in the future expansion of these fast-growing economies, Hungary opined.

Bulgaria's greenhouse gas emissions in 2006 stood at 71.3 million metric tons of CO2 equivalent, down 38.9 per cent from 1990, according to the European Environment Agency (EEA), which issued its report on EU27 greenhouse gas performance in 2006.

The report says that Bulgaria has succeeded in cutting greenhouse gas emissions in all categories of pollutants: energy supply and use (62 per cent of total), transport (12 per cent), industrial processes (10 per cent), agriculture (seven per cent), waste (11 per cent), international aviation and maritime transport (close to zero) compared to 1990.

The performance of the seven-member squad is similar.

The EEA also noted that EU15, the group of countries that made up the EU before the 2004 expansion,  was still the main pollutant, accounting for 81 per cent of the EU total.

While the Hungarian proposal was rebuffed by several EU15 environment ministers as countervailing the Kyoto Protocol principles and the EU target to cut CO2 emissions by a fifth by 2020, it was received well with business es operating in Bulgaria.

A score of business people called on Bulgarian members of European Parliament to immediately start looking for add-on support to enhance the country's bargaining position.

BIA also suggested that they seek rapport with other member states that have been adversely affected by the EC proposal. The association pointed to Greece, Finland, France, Sweden and the UK as suitable partners.

The developments come at a time when the fight against climate change has topped the priority list of global political leaders and businesses.

Speaking on the occasion of the EEA report release, EU Commissioner for Environment Stavros Dimas gave credit to EU newcomers' past achievements yet added: "The emission increases in the majority of EU-12 countries are not helpful. The EU-12 countries have to bear in mind that they cannot rely on the successes of the past. Our targets for reducing greenhouse gas emissions after 2012 are for the EU-27 together and a continuous effort will be required by all Member States to achieve them."

Climate change sensitivity also transpired through a call from the world's largest firms to halve carbon emissions by 2050. The urge for "a paradigm shift toward a low-carbon economy by 2050 has the potential to drive the next chapter of technological innovation," reads the statement circulated by UK daily The Guardian. "It will require a third - this time a green - industrial revolution."

The statement is intended to gain the attention of G8 leaders ahead of their July meeting in Japan.