– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

He wasn’t present and he isn’t even in office yet, but Barack Obama was the elephant in the room at last week’s European Union summit on economic recovery and climate change.

The 27 EU leaders knew they needed strong agreements to reduce greenhouse gas emissions and give their recession-hit economies a big fiscal stimulus to make themselves credible partners for the U.S. president-elect.

Europe’s green deal had to be bigger, bolder and more ambitious to avoid being dwarfed when Obama announces his own clean energy program at his inauguration next month.

After the EU agreed on rules to cut carbon dioxide emissions by 20 percent by 2020, draw 20 percent of its energy from renewable sources and reduce energy consumption by 20 percent, European Commission President Jose Manuel Barroso adapted Obama’s campaign slogan to drive home the point.

“Our message to our global partners is ‘yes, you can’,” he declared. “Yes, you can do what we are doing … especially to our American partners.”

“We are asking him (Obama) to join Europe and with us lead the world.”

French President Nicolas Sarkozy, climaxing an energetic six-month presidency of the EU, proclaimed: “No other continent in the world is setting itself such binding limits as the measures we have just adopted.”

Behind their hubris lay worries that the charismatic new U.S. president could grab the mantle of green leadership from Europe, even though the goals he has outlined so far are more modest — to stabilize U.S. carbon emissions by 2020.

“The risk is that the Europeans could be upstaged by Obama acting more radically than Europe,” says Antonio Missiroli of the European Policy Center think-tank.

There is also the perennial fear that Europe may not figure very high on the new American leader’s radar screen, and that he may care more about relations with Asia’s emerging economic powerhouses than with the slow but steady EU.

“For Obama’s agenda, Euorpe is neither very relevant nor an obstruction. It doesn’t tip the balance,” Missiroli said.

Sarkozy warned more reluctant EU leaders that Europe would make itself look ridiculous if it abandoned its green ambitions just when the United States had finally elected a president who made climate change his priority.

Brussels officials are talking enthusiastically of linking the European emissions trading scheme with a future U.S. system to lay the foundation for a global carbon market.

They may be in for a cold shower, given likely resistance in the U.S. Congress to any binding cuts in carbon emissions.

Indeed, EU and U.S. officials are pessimistic about the chances of an international agreement in December 2009 at United Nations talks on a climate pact to replace the Kyoto Protocol, which Washington never ratified.

Some European leaders argued that the EU had to take the lead precisely because of the problems Obama will face at home.

“An EU agreement will support President Obama, who will have great difficulty getting an agreement on a system of emissions trading,” German Chancellor Angela Merkel told fellow leaders behind closed doors, according to an official record.

On the economy too, Barroso argued that Europe and the United States should coordinate their recovery programs.

Yet the main European powers remain divided on the correct response to the recession, despite agreeing on paper on a European Commission programme calling for a stimulus of about 1.5 percentage points of Gross Domestic Product.

Obama has indicated he is considering a far bigger fiscal jolt to the economy, given the scale of the U.S. recession.

Germany’s finance minister has branded Britain’s sweeping cut in sales tax “crass Keynesianism”. All other EU countries rejected any across-the-board cut in Value Added Tax.

France has focused its recovery measures on public infrastructure investment, plus a short-term cash incentive to trade in old cars for new ones.

Merkel has resisted pressure from Berlin’s EU partners to do more to stimulate Europe’s biggest economy, but she now faces domestic calls too for tax cuts and spending on public works.

On both climate change and the economy, Europe hopes to find a more cooperative partner in Obama, but perhaps with a degree of self-delusion about his interest in European solutions.

For previous columns by Paul Taylor, please click here.