The government has insisted it will work with energy-intensive industries to ensure heavy-hitting carbon cuts do not drive them out of the UK.
Climate change secretary Chris Huhne has confirmed the government will commit in law to a 50 per cent cut in carbon emissions on 1990 levels by 2027 through its fourth carbon budget.
But responding to concerns that industries such as steel are being priced out of the UK through its commitment to cutting carbon, Mr Huhne said discussions were ongoing about ways to assist energy-intensive industries.
“Before the end of the year, we will announce a package of measures for the energy-intensive businesses whose international competitiveness is most affected by our energy and climate change policies.
“Rising electricity costs pose a risk to those businesses’ sectors, which are critical to our growth agenda. We will therefore take steps to reduce the impact of government policy on the cost of electricity for those businesses.”
The commitment to law of a 50 per cent cut in emissions was welcomed by groups including the UK Green Building Council, Institution for Civil Engineers and environmental lobbyists the Aldersgate Group.
UKGBC chief executive Paul King said: “This is a world-leading target – and absolutely the right decision. Government has shown it still has the ambition, but the proof of the pudding will be in the policies.
“Forty-three per cent of carbon emissions in the UK come from the energy we use in our homes and buildings and this is where the most cost-effective, pro-business carbon savings are.”
ICE director general Tom Foulkes added: “We welcome the government’s commitment to these ambitious targets however to achieve them we will need to attract hefty investment in low carbon energy.
“This will require a robust and effective reform of the electricity market to sufficiently reduce risk for investors as well as long-term changes to the regulatory and policy framework to enable the construction sector to deliver efficient, timely solutions.”
Mr Foulkes insisted that the investment in the environment will fail if construction is hindered by ongoing practical issues such as planning delays, specialist skills shortages and a stop-start approach to infrastructure development.
Mr Huhne insisted the carbon budget had the backing of the whole of cabinet, despite recent reports of opposition from the Treasury and business secretary Vince Cable.
He added that further green measures including the Green Deal would help the UK to achieve its targets: “We calculate that we will move up from the present figure of 27,000 jobs in the insulation sector to 100,000 by 2015 and that, at its peak, the policy will result in 250,000 jobs right across the industry, which will have to retrofit every home in the country.
Aldersgate Group chairman Peter Young said: “Strong carbon targets protect both the environment and the economy. They are vital for future competitiveness and provide the overall framework to enable the UK to be a leader in the transition to a low carbon economy.
“This will provide greater certainty for business to invest in green technologies and create jobs. Last week we called on the Prime Minister to show leadership on the climate change agenda and it is extremely welcome that he delivered. The focus must now be on the EU to raise its level of ambition.”