According to the groups, the German position will open the door to a

wave of similar objections from other states aiming to support their

own key industries. Poland has already argued that its power companies

will be disadvantaged by the move, and Italy has argued for free

permits for certain sectors.

Germany's move came after the European Parliament's industry committee

voted for a mandatory auction of carbon permits between 2013 and 2020

to replace the current system, which involves free distribution of the

permits. The proposal still has to be ratified by member states.

It argued that highly energy-intensive industries, such as steel,

would already suffer higher energy costs as a result of the impact of

carbon permits on the power producers and they should receive an

exemption provided they used best available technology to reduce

emissions.