The European Parliament on Wednesday adopted draft reforms of Europe's carbon market after 2021, a key step in reaching the bloc's climate change goals.

The European Commission published its reform plans in July 2015 for the EU's Emissions Trading System (ETS), the world's largest.

Ivo Belet, climate spokesman for the centre-right European People's party, said the "balanced" reforms would help the EU meet the Paris climate change targets, agreed at a landmark conference in December 2015.

The carbon trading system puts a cap on the amount of carbon dioxide allowed to be emitted by large factories and other companies.

The firms can trade in quotas of these emissions -- the idea being to provide a carrot to improve energy efficiency or switch to cleaner sources so that they keep within the ceiling.

MEPs however insisted on a more ambitious scheme than that proposed by the commission, the executive arm of the 28-nation EU.

The parliament in particular wants to cut 800 million emissions quotas in 2021, under an emergency mechanism that had been reserved for "market stability".

Under the Paris climate deal, the EU plans to cut greenhouse gas emissions by 40 percent by 2030, compared against 1990 levels and make renewable energy account for 27 percent of energy use.