The paper, passed between Government departments to discuss possible policy, suggests EU nations should be allowed to trade 50% of their emissions reductions rather than the 30% currently put forward by the European Commission.

It argues that extra trading of carbon permits through the Clean Development Mechanism (CDM) would benefit environmental projects in developing countries.

The document, dated August 8, has come to light ahead of crucial votes in Brussels on the European Commission’s climate and energy package next month.

It said: “The UK proposes that there should be increased access to project credits in both the EU-ETS (Emission Trading Scheme) and Non-ETS.

“Setting the limit at 50% of absolute effort across the whole economy gives an additional 1,000mtCO2 in project credits across 2013-2020.”

It added that the 50% limit would allow increased flexibility while continuing to demonstrate the EU’s commitment to funding projects in the developing world and “sending a strong message that the EU is serious about tackling climate change domestically”.

But WWF-UK, which was leaked the so-called non-paper, has reacted angrily to the proposals.

Keith Allott, head of climate change, said: “Europe urgently needs to embrace the huge opportunities of moving to a more efficient, low-carbon economy.

“But by relying on ever higher levels of offsetting, we will be giving the green light to a new round of investments in unabated coal-fired power stations and other carbon-intensive industries.

“The difference between what the EU and the UK are proposing is equivalent to the annual emissions of 34 extra coal-fired power stations in Europe.”

Kate Martin

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie