Prime Minister Stephen Harper told a German business audience Monday thatCanada won't meet its Kyoto targets to lower greenhouse gas emissions, but can be a world leader in battling climate change.

Harper, who arrived in Europe on Sunday for the upcoming Group of Eight summit in Germany, spoke at a lunchof the Canada-German Business Clubin Berlin.

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Prime Minister Stephen Harper addresses business leaders at a luncheon meeting in Berlin on Monday. ((Fred Chartrand/Canadian Press))

He told his audience that Canada can't meet its Kyoto targets without destroying its economy, blaming years of inaction on climate change by Liberal governments before his Conservatives won the 2006 election.

"When we came to office last year, Canada's emissions were 33 per cent above the target and rising, which meant months before the targets kicked in, it had become impossible to meet the Kyoto commitment without crippling our economy," the prime minister said.

Harper said he believes his government's plan for intensity-based targets to limit greenhouse gas emissions will be more effective than setting overall reduction targets.

All countries can adopt the intensity-based system and it will allow developing powers like China and India to sign on to an emissions-reduction plan without sacrificing their economies, Harper said.

Large-scale emitters such as the United States did not sign on to the Kyoto Protocol, which expires in 2012.

Under the Harper government's proposed intensity-based targets, companies must reduce the amount of emissionsper individualunit produced — for each barrel of oil ortonne of coal, for example — but they don't have to reduce emissions overall.

Acompany that expands production could thereforeincrease its total output of greenhouse gas emissions and air pollutants.

Critics of the plan say the approach allows heavily polluting industries, such as Alberta's oilsands, to continue to grow and pollute, while remaining under government-imposed limitations.

"Theonly thing special or unique about the plan is the government's abdication of its responsibility," Liberal MP Bonnie Brown told the House of Commons on Monday. "It's a Conservative charade on the international stage."

Many environmentalists believe capping greenhouse gas emissions is key to tackling climate change.

Some common ground, says Merkel

Harper addressed the luncheon before meeting with German Chancellor Angela Merkel and otherEuropean Union leaders at a Canada-EU summit in the German capital.

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'Of course we are not happy at this point that Canada has abandoned Kyoto's goals,' German Chancellor Angela Merkel, the G8 summit host, said Monday.

G8 host Merkel has called for ambitious emissions targets and an agreement that would limit the warming of the planet to two degrees.

In an interview with CBC's chief political correspondent Keith Boag on Monday, Merkel said she's not pleased Canada has abandoned any attempt to meet its short-term Kyoto targets.

However, she did say she shares common ground with Harper on long-term targets, with both calling for significant reductions on greenhouse gases by 2050.

"Of course we are not happy at this point that Canada has abandoned Kyoto's goals. But Canada says it also sees the necessity to put in place long-term goals for reduction until the middle of the century," Merkel said in German.

"And when I said I wasn't happy Canada abandoned the Kyoto goals, I am equally encouraged that we can agree that, long term, we need to reduce emissions significantly."

Harper willalso meet with France's new president, Nicolas Sarkozy, and French Prime Minister François Fillon on Tuesday before returning to Germany for the G8.

PM to build consensus: Baird

Hosted by Merkel in the German town of Heiligendamm, the summit also includes leaders from the United States, Britain, France, Japan, Italy and Russia.

The gathering at the fenced-off coastal town will focus on a number of issues, includingclimate change.

Environment Minister John Baird, who travelled to Berlin with the prime minister, said Harper will take on the role of consensus builder.

"We're going to work hard to be a consensus builder," said Baird. "If we want to see this global problem successfully addressed, it's imperative that we get countries like China and the U.S. involved."

Hundreds of people were injured in weekend protests near Heiligendamm as tens of thousands of demonstrators gathered to protest globalization and the war in Iraq.

German officials said Sunday that 400 police officers and 520 demonstrators were hurt in clashes in the port city of Rostock.

With files from the Canadian Press