Peers also heard questions on Rwanda, recognising Palestine as a sovereign state, and the EU emissions trading scheme.

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The EU Emissions Trading Scheme ( ETS) has been seen as the world's best attempt to cut carbon by means of cap and trade.

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Some reports say the prime minister will push for the aviation industry to be brought within the EU's emissions trading scheme.

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"A huge slice of the 11.3% reduction was achieved long before the EU's Emissions Trading Scheme (ETS) got underway, " he told BBC News.

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The EU brought in the Emissions Trading Scheme on 1 January.

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And from the corporate sector, seven companies involved in aviation have written to European governments complaining about the recent inclusion of plane emissions in the EU Emission Trading Scheme (ETS).

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Mr Yeo said new rules which required any airline that landed or took off within the EU to take part in its emissions trading scheme gave "cover for change in the coalition's position".

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While at first glance one might expect Democrats and environmentalists to be pushing for inclusion in the EU trading scheme, in fact the issue here is less about CO2 emissions than it is about taxes and what they fund.

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