Speaking ahead of an European Union summit starting Thursday in Brussels, Merkel told the top-selling Bild newspaper: "It must not take decisions that would endanger jobs or investments in Germany."

"I will make sure of that," she added.

Merkel championed climate protection during her presidencies last year of the EU and the Group of Eight most industrialised nations, even travelling to Greenland in thermal gear to draw attention to melting ice floes.

Under her leadership, EU leaders vowed to make sure Europe would play a "pioneering" role in tackling climate change, pledging to cut greenhouse gas emissions by 20 percent by 2020 compared to 1990 levels.

They also agreed to promote renewable energy so it would account for 20 percent of all energy sources, and to cut overall energy use by 20 percent.

But the German economy -- Europe's largest -- has hit the skids in the meantime and jobs are at risk.

The world's biggest exporter of goods fell into recession in the third quarter, according to official figures, and the economy is likely to contract next year at its fastest rate since 1945.

Against this backdrop, some economists are warning the cost of being green will become perilously high.

Germany could lose more than 100,000 jobs if the EU makes industries pay for pollution rights that are free at present, according to an unpublished economy ministry report recently cited in the press.

Another study by the Muenster-based EEFA research institute pointed to increased costs stemming from reforming pollution rights, making Germany's key industrial sector less competitive and threatening up to 300,000 jobs by 2020.

But environmental activists were prompt to criticize Merkel's apparent U-turn.

"We're horrified -- last year the chancellor put herself about as the climate chancellor, now she's fighting to ensure that German industry keeps rights to pollute for free," Oxfam Germany's spokesman Jan Kowalzig said in a statement Monday.

Under EU proposals, companies will soon have to purchase rights to pollute.

Berlin wants most emissions allowances to be free for heavy industry, whereas the EU plans would see the percentage auctioned off gradually increased up to 100 percent in 2020, when every tonne of CO2 will have to be bought.

Over the weekend, a number of regional leaders from Merkel's conservative bloc also warned of the risk to German companies of new climate protection regulations.

"Overcoming the global economic crisis must now have priority -- also in the EU," said Juergen Ruettgers, who heads the heavily industrialised western state of North Rhine-Westphalia.

"The German government ought to hang on to its climate change goals in dealings with the EU, but should move back the deadlines," said Peter Mueller, who heads the Saarland region.

Merkel last week had also warned that an EU climate pact would fail without a "sensible" global deal in 2009 that involved the United States.

"Europe accounts for 15 percent of the world's CO2 emissions," Merkel told parliament.

"If the United States does not participate, if we don't agree next year on a sensible international deal, then our efforts in Europe to lead the way will of course fail," she added.

United Nations climate talks are currently underway in Poland where representatives from around the world are attempting to lay the groundwork for a new global climate pact to be signed in Copenhagen in December 2009.

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