But there is no doubt that EU countries are moving fast toward cutting carbon emissions, despite complaints from German and other industrialists who fear the price disadvantage could hurt them in export markets already shrunken by the global recession.

France's reliance on nuclear for 80 percent of its power is well-known, and Britain has just given the go-ahead for the world's largest wind farm in the Thames Estuary. Known as the London Array, the $3 billion project will benefit from new government incentives for power companies to buy electricity from suppliers who do not use fossil fuels. And thanks to a technical breakthrough, the German, Danish and Abu Dhabi-backed consortium can now erect the 260-foot towers in 14 hours, rather than the five days originally assumed.

But Portugal is the European country that environmentalists are watching most closely, thanks to a highly ambitious alternative-energy program drawn up earlier this decade that is now paying off. Portugal now boasts Europe's largest on-land wind farm, with 130 giant turbines strung along the mountainous ridges near the Spanish border, and the world's biggest operational solar farm, a $450 million project whose 2,520 photovoltaic panels swivel to follow the sun throughout the day.

Portugal has no oil, coal or gas, but it has plentiful wind, solar and potentially wave power, and Economics Minister Manuel Pinho wants his country to become a leading developer and manufacturer in the industry. Foreign groups bidding for the wind and solar contracts have to work with Portuguese employees and manufacturers to help develop Portugal's expertise.

"What seemed extravagant in 2004 when we decided to go for renewables now seems to have been a very good decision," Pinho said. "Countries that do not invest in renewables will pay a high price in future. The cost of inaction is very high indeed. The perception that renewable energy is very expensive is changing every day as the oil price goes up. Energy and environment are the biggest challenge of our generation. We need to develop a low-carbon model for the world economy."

Portugal's goal is to generate 60 percent of its electricity from renewable sources by 2020. The country is already ahead of its planned targets for 2011, and more than $15 billion of investment has been committed. Although that is only one-tenth of the $150 billion that will be required for Portugal to reach its goal by 2020, government and the main political parties support the plan, the key element of which is a guarantee of future electricity prices to give power companies a predictable cost structure.

Portugal suffered a setback for its ambitions to exploit wave power when the Pelamis project off its northern coast ran into trouble from the grueling conditions at sea. A series of "snakes" that generate power from the up and down motion of the waves had to be brought back to land, and the recession then drove its engineering partner, Babcock & Brown, into administration, the British equivalent of Chapter 11 bankruptcy. But Pelamis is already building its next-generation wave system in Scotland for the German-owned E.ON group, and it is due to undergo its first trials later this year at the European Marine Energy Center in the Orkney Islands of northern Scotland.

Despite this setback, since 2005, Portugal has tripled the amount of power from hydroelectricity, tripled its solar power and increased its wind power six-fold. What it has deliberately not done is invest in nuclear power, although Finland and France are building new nuclear plants and Britain plans to follow suit.

"When you have a program like ours, there is no need for nuclear power," Pinho said. "Wind and water are our nuclear power. The relative price of renewables is now much lower, so the incentives are there to invest."

But the incentives that Portugal and other countries are using for alternative energy, mainly through subsidies and guaranteed price structures, could be intensified or replaced by the kind of carbon tax that Sweden proposes for the EU. Sweden has had a form of carbon tax since 1991. Other EU countries levying taxes on carbon emissions from fuel, light industry and agriculture include Finland, Denmark and Slovenia.

"We now have a system with a cap on 40 percent of emissions," said Sweden's Carlgren, referring to the EU cap-and-trade system to limit carbon dioxide emissions. "But the remaining 60 percent also need to come down, and a climate tax such as a CO2 tax is absolutely one of the best ways to achieve this."

Previous attempts to impose an EU-wide carbon tax have met resistance from France and Britain, which prefer to keep taxes under national authority, and from less prosperous countries that still depend on coal and oil. Portugal used to be among them until it took the alternative route of heavy investment in alternative energies.

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