* Ruling forces Germany to toughen climate laws
* EU chief says German action could encourage others in EU
* Says Commission planning second emissions trading system
By Andreas Rinke
BERLIN, May 7 (Reuters) - A landmark court ruling telling Berlin to toughen its climate laws is an opportunity for Germany to gain a competitive edge in low-carbon technologies, and may prompt other European countries to do the same, EU chief Ursula von der Leyen said.
Germany's top court said last week the government had failed to spell out how it would reduce carbon emissions beyond 2030 after plaintiffs, including North Sea islanders fearing inundation from rising sea levels, challenged the 2019 climate law as unfit for purpose.
"The constitutional court decision is a huge opportunity for Germany and Europe ... and can create a win-win situation for both," European Commission president von der Leyen told Reuters.
Von der Leyen, who was Chancellor Angela Merkel's defence minister until 2019, has made climate change the central plank of her Commission's policy agenda, centring around a target to slash the EU's net greenhouse gas emissions to zero by 2050, which she unveiled days after taking office.
Germany announced more ambitious plans to cut greenhouse gas emissions after the ruling, as Merkel's conservatives and other parties work to hone their green profiles ahead of a national election in September. The Greens currently lead in the polls.
By taking ambitious action to implement the ruling, Germany can motivate other EU member states to follow suit, von der Leyen said, adding it was in Berlin's own interest to bolster its lead in innovative and climate friendly technologies.
She said Europe needed to stay alert to avoid falling back in the global technological race for low-carbon solutions.
"One year ago, we Europeans were alone with our ambitious climate goals, but now many other important players such as China, South Korea, South Africa, Japan and particularly the United States have entered or re-entered the stage," von der Leyen said.
"The competition has been opened as to who will conquer the global market with the best technologies."
The European Commission is drafting a package of climate change policies to be unveiled in July and intends to cut greenhouse gas emissions faster across all sectors of the economy.
The aim is to put the 27 nation bloc on track for its new climate target to cut economy-wide net emissions at least 55% by 2030, from 1990 levels. Most existing EU climate policies are designed to meet the bloc's old target to cut emissions 40%.
Von der Leyen said the greatest potential for emissions savings was in the energy sector.
She said the Commission was planning a second emissions trading system, to cover buildings and transport, but that imposing a CO2 price in these sectors should not hurt poorer citizens - for example, by increasing their energy bills.
"What is very important to me: If the CO2 price rises, there must be social compensation for lower income groups. Additional costs for CO2 savings have to be borne by those with stronger shoulders," von der Leyen said.
(Writing by Sabine Siebold and Kate Abnett; Editing by Alison Williams)