He will say that the proposals are not just probably in breach of international trade rules, but also "not good politics", according to the business daily.

The levy, which aims to cancel the competitive advantage gained by countries that are not lowering their carbon emission, would be "highly problematic under World Trade Organisation (WTO) rules and almost impossible to implement in practice," Mandelson will say.

"Not participating in the Kyoto process is not illegal," Mandelson will say in a podcast later Monday for about 50,000 subscribers.

"Nor is it a subsidy under WTO rules ... How would we choose what goods to target? China has ratified Kyoto but has no Kyoto targets because of its developing country status.

"The US has not ratified but states like California have ambitious climate change policies," he will say.

In his view, as well, it will undermine international co-operation for combating climate change.

He does, however, back proposals to include all airlines taking off or landing in the EU in its carbon emissions trading scheme, the FT said.

Mandelson is also writing to WTO director general Pascal Lamy, suggesting talks based around scrapping tariffs on renewable energy and equipment for clean power generation.