By Gabriela Baczynska and Kate Abnett
BRUSSELS (Reuters) - Britain's refusal to seal climate commitments in a new deal with the European Union to govern their relations after Brexit has become a stumbling block in their deadlocked talks and raises the risk of future trade disputes.
While Britain has joined the global Paris agreement to fight climate change and has its own ambitious emissions-cutting goals, London has refused to make binding commitments in the area in the new deal it is seeking with the EU from 2021.
"This creates big problems with the level playing field and is increasingly politically sensitive in the EU," said an official from the 27-nation bloc.
Britain has a legally-binding target to reduce its net greenhouse gas emissions to zero by 2050. The EU's executive Commission wants to set the same goal for the bloc, although it has yet to secure the support of all member states.
Yet their bust-up over climate provisions in the new deal reflects fundamental differences about the nature of their future relationship.
"The EU is trying to put this into the trade deal in another example of how it is seeking to continue influencing domestic UK policies," said a British official.
The EU wants to keep Britain closely aligned under a broad deal that, beyond trade, would cover security, fisheries and multiple other fields, including climate.
But London wants to break away from the EU's orbit and prefers a trimmed-down trade deal only.
LEVEL PLAYING FIELD
The 'level playing field' - extensive guarantees of fair competition ranging from labour and climate standards to state aid - is a key EU demand in the talks with Britain, a large economy on its doorstep. Brussels fears that UK imports could otherwise undercut the EU's cherished single market.
London rejects such commitments after Britons voted narrowly to leave the EU in 2016 under the slogan of "taking back control" of their own laws and regulations.
The rift raises the possibility of future trade disputes over climate as Brussels has pledged to impose carbon border costs on imports from countries with less stringent climate policies than its own.
Britain's long-term emissions targets currently match the EU's ambitions.
But Brussels officials say that - without binding climate commitments in the new EU-UK deal - it is unclear what would happen if one party set a more ambitious emissions-cutting goal or amended its carbon pricing policies in a way that ended the current "level playing field" on climate policies.
Britain formally left the EU in January and is now in a status-quo transition period till December. The two sides have given themselves until the end of June to assess progress in the talks, now largely stalled, on their new relationship.
They can either agree to extend their negotiations beyond the end of the year - something London refuses to do - or face an economically disruptive no-deal Brexit.