Environmental campaigners had expected the government to introduce an EPS in a draft energy law due to be published in the autumn. But in July Mr Huhne said it would consult on a number of issues related to electricity market reform, including an EPS, and make proposals in a white paper in spring 2011.

No new coal-fired power station will be built without carbon capture storage (CCS), which would be essential to meet an EPS, the minister said on Tuesday. However, campaigners say that CCS without an EPS may not be sufficient if it turns out the technology is not able to achieve its carbon reduction potential.

Energy and carbon firm Utilyx says the EPS should be introduced gradually, and apply to gas- and coal-fired power plants. EU law allows member sates to set CO2 limits for power plants. Campaigners backed by a group of MEPs failed to successfully lobby for an EU EPS during negotiations on the Industrial Emissions Directive (IED).