UPDATE 1-EU climate chief counters fear of power price surge

(Adds quotes, detail)

By Pete Harrison

PARIS, July 4 (Reuters) - The European Union's environment chief said on Friday Poland had overstated the impact on power prices of EU efforts to tackle climate change and a rift between eastern and western states would not prevent a deal this year.

The EU is still on track to reach an agreement by the end of 2008 on ambitious cuts in greenhouse gas emissions and renewable energy use so it can take the lead in international climate talks, Environment Commissioner Stavros Dimas told Reuters.

France, which took over the EU's rotating presidency this week, has made climate change its top priority and hopes to settle concerns by eastern European states that curbs on carbon dioxide will push up power prices and stunt economic growth.

Eight eastern states with fast growing catch-up economies are pushing for the EU to ease their pain when it overhauls the Emission Trading Scheme (ETS), the main tool to curb global warming that makes companies pay for permits to emit CO2.

Poland, which gets about 90 percent of its power from carbon-intensive coal, wants its power companies to receive free CO2 permits for longer to ease electricity price rises.

Warsaw says EU plans to make power generators buy CO2 permits at auction from 2013 would push up electricity prices by up to 70 percent, which would be politically unsustainable.

"We do not agree with their calculations," Dimas said in an interview at a meeting of EU energy and environment ministers in Paris. "There could be a 10-15 percent increase, and this is over a period of time."