"There have been steps towards a balanced compromise, but Italy is not satisfied," Frattini said in remarks quoted by the ANSA news agency the day before EU leaders were set to debate the plan in Brussels.

Andrea Ronchi, the minister for European affairs, said for his part that "conditions are not right to say we have reached agreement" at the European Union level.

"We still have concerns over the protection of the manufacturing sector," he said, pointing in particular to the ceramic, glass and paper industries.

EU leaders were set to meet on Thursday and Friday to hammer out the sticking points in the so-called 20-20-20 plan, which sets three targets for 2020: a 20 percent cut in greenhouse gas emissions, a 20 percent cut in energy consumed and 20 percent use of renewable energy.

The package will require the unanimous approval of all 27 EU heads of state and government at the Brussels summit.

Italian Environment Minister Stefania Prestigiacomo said she was "cautiously optimistic" of an agreement in an interview in Wednesday's edition of the financial daily Il Sole 24 Ore.

"All European countries realise that this subject has to be wrapped up this week," she said.

However, Italy will "not back down" on some points, notably a planned review of the goals in 2014 and free emissions authorisations for energy-guzzling industries and those with competition outside the EU, she said.

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