(PRAGUE) - The Czech government on Wednesday urged the European Union to slowly phase in a scheme to set up a market in greenhouse gas emission quotas, citing the danger of a sharp rise in power prices.

The European Commission had proposed in January that power companies buy all their pollution permits in auctions starting in 2013 as as part of a strategy to combat climate change.

But Czech Prime Minister Mirek Topolanek said Wednesday that Brussels should introduce the "auctions gradually between 2013 and 2020" if the final target is for power firms to buy a permit for all greenhouse emissions.

And the industry ministry said in a statement that the EU plan risked "a significant rise in electricity prices which would have a negative impact on the competitiveness of Czech industry".

The position of the centre-right Czech government echoes misgivings of many former Soviet-bloc countries that their coal reliant energy producers and often energy wasteful industries will suffer under the proposed measure.

Poland and Slovakia were among the biggest critics of the Commission plan when it was discussed for the first time by environment ministers in Brussels on Monday.

Three-fifths of current Czech electricity production comes from coal-fired plants, which are amongst the biggest producers of greenhouse gases and would be penalised heavily by the allowances purchase plan, Topolanek pointed out.

Up until now, emissions allowances have been handed out free and companies have been allowed to make windfall gains by selling them on if they undershot their needs.

Many power companies in Central and Eastern Europe have so far profited heavily from the EU's emission allocation scheme, thanks to a generous share out of the pollution permits by national governments.

These benefited from a sharp drop in pollution after 1990, the date from which national pollution performances have been measured until now.

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