Currently governments hand out most of the certificates to companies for free, a process that has led to "windfall profits" for power companies, which have simply passed on the costs of participating in the scheme to consumers.

German Environment Minister Sigmar Gabriel, whose country holds the EU's rotating presidency, said he thought a review of the scheme should suggest requiring auctioning of all the permits instead of giving them to industry free of charge.

"We are convinced that we need much more auctioning today," he told reporters at a meeting of EU environment ministers.

"We will probably receive proposals to auction at least 50 percent (of the certificates). If you really take this instrument seriously, you will have to auction 100 percent at some point in time."

Analysts say full auctioning would wipe out utility companies' windfall profits and impose a net cost from the scheme.

The European Commission has proposed adding the airline sector to the ETS and included a high requirement for auctioning for that sector in its proposal.

Gabriel called for a more uniform approach across the 27-nation bloc to setting caps on industrial emissions.

At present national governments set the limits themselves in national allocation plans, which require approval from the EU's executive Commission.

"We have to harmonise the trading system if we want to use it also as a market-based instrument," Gabriel said.

He said the scheme would have to create more scarcity in the trading phase that begins in 2013 if the bloc wants to meet its ambitious targets to fight climate change.

"If we want to achieve our emissions goals by 2020 we have to reduce the certificates by 2013 significantly," he said.