By Pete Harrison and Darren Ennis

BRUSSELS, Dec 11 (Reuters) - European leaders will seek to ease the shock for heavy polluters when they meet later on Thursday to agree measures to tackle climate change, a draft document shows.

The European Union hopes to agree ways of cutting carbon dioxide, the main greenhouse gas, to 20 percent below 1990 levels by 2020, as it heeds warnings of stormier weather, droughts, famines and rising sea levels.

Having already struck deals in recent weeks to promote green energy and cut emissions from cars, the focus has switched to the most contentious issues -- power generators, heavy industry and manufacturing.

Eleven countries will get extra room to hit their emission targets by paying for cuts in the developing world, via carbon offsets, according to a final version of the text obtained by Reuters that will form the basis for leaders' negotiations.

The plan would allow countries such as Sweden with renewable energy targets over 30 percent, or those with big transport sectors such as Cyprus, to achieve over 80 percent of their cuts overseas, EU sources said.

POWER SECTOR

Proposals to make power generators pay for permits to pollute from 2013 are aimed at making the dirtiest plants uneconomical, but that has caused alarm in Poland, which gets over 90 percent of its power from highly polluting coal.

Poland's demand for coal plants to get 70 percent of their emissions permits free in 2013, paying for them fully by 2020, has been accepted in the draft seen by Reuters.

Other nations could be granted opt-outs for their power sector for other reasons -- Malta and Cyprus because they are not connected to the EU electricity grid and the Baltic states because they are poorly connected.

The least wealthy states such as Bulgaria and Romania could opt out power plants on economic grounds, and other eastern European states on the grounds of being more than 30 percent reliant on coal.

To lessen the shock of having to overhaul their heavily polluting power sectors, eastern European nations have been promised a 7.5 billion euro ($9.7 billion) "solidarity fund", comprising 10 percent of the proceeds from the sale of EU emissions permits.

Poland has assembled a coalition it called "the group of nine" arguing for the fund to be bolstered and threatening to veto the EU's climate plan if its demands were not met.

HEAVY INDUSTRY

A further 2 percent could be distributed to the east Europeans to take account of massive reductions in their emissions when some of their industries collapsed in the wake of communism, the draft shows.

But increasing the solidarity fund is opposed by several EU countries, most notably Britain and Germany.

"It's all at the expense of the western countries so it will be very difficult to negotiate an increase of even 1 percent," said a Bulgarian government official. "It would be a huge success to agree even on the smallest percentage."

EU negotiators said late on Wednesday Germany and Poland were working on another approach that could deliver 40-50 billion euros to east Europeans between 2014 and 2020.

Other measures in the document allow wide swathes of industry to be completely exempted from buying emissions permits in order to protect their ability to compete in international markets.

Among them are sectors that foresee a 30 percent cost increase due to carbon curbs, or that have a 5 percent or more cost increase and are deemed as 10 percent or more exposed to international competition.

EU diplomats say that would exempt around 90 percent of industry. (Additional reporting by Anna Mudeva and Marcin Grajewski)

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