Companies are likely to have to buy some of their permits to pollute rather than be given them under revisions to the European Union's greenhouse gas emissions trading scheme being considered by ministers.

Auctioning some permits would be a way to claw back some of the gains made by power generators from the scheme. Analysts say the generators are profiting by up to £800m a year from the first three-year phase by passing on the notional cost of the permits to consumers through higher bills even though they had received their permits free.