Unlike the European Union, neither China, India nor the United States have yet agreed to binding emissions reductions.

The idea of imposing some kind of tariff on goods imported from countries with less strict controls on greenhouse gases was first put forward by former French President Jacques Chirac.

But the plan has run into opposition from European Trade Commissioner Peter Mandelson who has said it would be hard to implement and could lead to trade disputes.

A preliminary draft, seen by Reuters, says companies importing goods into the 27-nation European Union from countries that do not similarly restrict greenhouse gas emissions would have to buy EU emissions permits.

A Commission official confirmed that the carbon charge issue was still under consideration, despite opposition.

"It's very much debated," the official said. "It's not solved yet."

The measure, which needs the backing of EU governments, would be equivalent to a carbon tariff, taxing imports based on the price of emissions permits in Europe and the amount of greenhouse gases produced in the manufacture of the goods outside the EU.

UNILATERAL TARGETS

The European Union says it is a leader on climate change and is alone in pushing for tough, unilateral emissions-cutting targets, saying it will cut greenhouse gases by a fifth by 2020 versus 1990 levels.

France, other EU countries and energy-intensive industries in Europe, such as its steel sector, want to avoid further losses of competitiveness against producers in China and other emerging economies as well as rivals in the United States.

European companies will face tougher penalties from 2013 under the EU's Emissions Trading Scheme. Participants already have to buy emissions permits above a certain quota that they get for free, and the Commission will cut that quota from 2013.

The preliminary draft seen by Reuters said that from 2013 electricity generators would get for free half the permits that they receive now and other companies would get 90 percent.

German financial newspaper Handelsblatt reported on Friday that overall the European Commission would auction 60 percent of all emissions permits from 2013, compared with a maximum of 10 percent now and the rest given out free.

The final draft may yet be changed, the Commission official said. It is due to be discussed by senior officials over the next two weeks leading up to publication on Jan. 23.