Generous allocations of carbon emissions to cement manufacturers at a time when the economy was booming mean that they can now make money by selling carbon credits in a "perversion of the ’polluter pays’ principle", it has been claimed.

Donal Ó Riain, managing director of Ecocem - Ireland’s "green" cement manufacturer - said that with cement production expected to fall by a third because of the downturn in construction, the main beneficiaries would be its competitors. He explained that traditional cement producers had been given generous allocations to cover their carbon dioxide (CO2) emissions based on production levels at the height of the boom - so much so that they were now in a position to sell credits.

A lucrative international trade has developed in selling unused carbon credits.

"The over-allocation was something in the order of 1Mta and, at €25/t of CO2, that works out at €125m over five years," he said. "So they’ll be making windfall profits when sales fall because of the huge gap between allocation and use."

Mr Ó Riain said the Department of the Environment would not accept an Ecocem proposal that it should go back to Brussels to renegotiate the National Allocation Plan, approved last year.

He said a report commissioned by Ecocem and compiled by Prof Peter Clinch of UCD – who is now a policy adviser to Taoiseach Brian Cowen - had shown that the current Emissions Trading Scheme for CO2 "discriminates very severely" against Ecocem.

By producing cement from the slag by-product of steel manufacturing, the company is saving 300,000t of CO2 emissions per year - "more than the annual savings of 240,000t that the Minister expects from long-life lightbulbs", Mr Ó Riain said.

"For every tonne we sell, the traditional cement manufacturers lose market share, but still get credits . . . effectively what it means is that the polluter gets paid here - and that’s perverse."