Top UK officials immediately responded to Barroso's announcement saying they would fight against any move by the EU to impose a 'carbon tax' on imports from third countries.
The Commission President had told businessmen in London on 21 January that unless an international deal on cutting greenhouse gas emissions after 2013 is reached, the EU should "require importers to obtain allowances alongside European competitors, as long as such a system is compatible with WTO requirements".
"There would be no point in pushing EU companies to cut emissions if the only result is that production and indeed pollution shifts to countries with no carbon disciplines at all," he stressed.
The idea of climate trade sanctions to fend off competition from countries with less stringent environmental laws, such as the United States and China, has long been promoted by the French (EurActiv 26/11/07).
Trade unions also favour the scheme. John Monks, secretary general of the European Trade Union Confederation (ETUC) commented: "A solution exists to keep employment and the planet from being the losers: An import compensation mechanism, such as a carbon tax, which would equalise carbon costs for companies outside Europe and in Europe, while allowing a considerable effort to be demanded from industry".
But many fear it could dampen trade relations with some of the EU's main trade partners.
The US said it was "dismayed" at Mr Barroso's carbon tariffs suggestion. US Trade Representative Susan Schwab said: "We have been dismayed at a variety of suggestions where we see climate or the environment being used as an excuse to close markets."
British Energy Minister Malcolm Wicks also insisted that such plans simply amounted to "protectionism". "We are against any measures which might look like trade barriers," he said in an interview with the BBC on 22 January. He added that the UK favoured "a more sensitive approach", where European manufacturers are given allowances for free so that they are not at a competitive disadvantage. Such a system would not punish other countries that trade with the Union, he underlined.
Barroso certainly did not rule out the option of giving energy-intensive sectors, such as cement and steel, their emissions permits free of charge – an idea which is also being touted by industry groups, such as the European Round Table of Industrialists (ERT) and BusinessEurope.
Until now, drafts of the legislation have not chosen between free allocation or a 'carbon equalisation system', but instead call on the Commission to present a review of the situation in 2011, identifying the industrial sectors most at risk of relocating outside the EU (EurActiv 10/01/08).