A Czech bid for almost €2 billion of free allowances under the EU's Emissions Trading System (ETS) - equal to almost half Prague's 2012 budget deficit - has drawn heavy fire from Brussels and European environmentalists, who say it will do little to combat CO2 emissions.

The application for 107 million free allowances (worth €1.88 billion) was made under the little known `10c derogation' which exempts 10 of the newer member states from the ETS's full auctioning rules until 2019, if the resulting funds are used to modernise, diversify, and clean up electricity generation.