The deal appeared to offer new motivation to participants of the 189-nation United Nations climate talks in Poland to craft a strong stance against climate change despite the drag of the global economic recession.
The E.U.'s "20-20-20" plan, formed in Brussels, aims to decrease emissions of greenhouse gas by 20 percent, reduce energy use by 20 percent and develop 20 percent more total energy from renewable energy sources.
French President Nicolas Sarkozy said something "quite historic" had been hammered out in Brussels with the new agreement, the BBC reported.
EU Commission President Jose Manuel Barroso called the plans "the most ambitious proposals anywhere in the world".
U.S. envoy to the U.N. talks, Sen. John Kerry, D-Mass., touted the 27-nation group's agreement as an important step.
"The E.U. today said, 'yes, we can and here's how,' and that's pretty good," Kerry told the Agence France-Presse. Kerry met with other envoys for 12 days of discussion on how to prepare a global climate pact that may be offered for approval in Copenhagen a year from now. The pact is meant to replace the Kyoto protocol.
"I think it shows an example of what is possible if you work hard and come up with details for how you can reduce emissions and help countries that have different economies and different needs," said Kerry.
While U.N. and EU leaders praised the plan, some environmental groups voiced concern that it does not do enough and makes too many concessions to eastern European nations with high emissions rates.
"European heads of state and government have reneged on their promises and turned their backs on global efforts to fight climate change," Greenpeace and the World Wildlife Federation said in a joint statement.
In negotiating the 20-20-20 deal, both Poland and Ireland expressed some initial resistance.
Polish Prime Minister Donald Tusk was originally concerned that the plan would be quite costly on the largely coal-dependent power sector of his country. By Friday, however, Tusk was happy with the agreement, officials said.
"The prime minister achieved everything he wanted in negotiations on the climate package," the officials told Reuters. "The deal is flexible, allowing for the modernization of the Polish power sector and ensuring that there will not be any steep increase in electricity prices."
On the final day of the U.N. talks, former U.S. Vice President Al Gore addressed U.N. leaders and stressed the need for global cooperation on climate change.
"We now face a crisis that makes it abundantly clear that increased CO2 emissions anywhere are a threat to the integrity of this planet's climate balance everywhere," he said, according to Reuters. "As a result the old divide between the North and South, between developed and developing countries is a divide that must become obsolete."
On the sidelines of the talks, U.N. leaders formed a plan to aid undeveloped nations in their struggle for energy conservation.
"I am very happy," Richard Muyungi, chair of the board of the Adaptation Fund, told Reuters about the plan to launch a fund to help the poor adapt to impact of landslides, droughts or rising seas.
The main sticking point involved granting poor nations direct access to cash in the fund and was close to being solved, he said. The fund could be worth $300 million a year by 2012.