Updated: Cabinet approves fourth carbon budget - the reaction

Energy Secretary Chris Huhne has confirmed that the government will adopt targets to halve carbon emissions by 2025 and put the UK on course for a 60 per cent decrease by 2030.

BusinessGreen runs down the reactions from key industry players.

David Kennedy, chief executive of the Committee on Climate Change (CCC), was delighted government accepted its recommendations. 

"This is a world first: no other country has made legally binding commitments to ambitious emissions reduction targets for the 2020s.

"The carbon budget will underpin much of the high level ambition set out in the Coalition Agreement. It is important now to translate this ambition into detailed policies with strong incentives.

"The key areas to focus on now are the Electricity Market Reform, demonstration of CCS technology, the Green Deal, the Renewable Heat Incentive, and support for electric vehicle market development.

"Aiming now to introduce clean technologies in these sectors and meet the carbon budget will ensure that we make the right investment choices, maximising long-term growth and reducing our reliance on imported fossil fuels."

CBI director of Policy Katja Hall urged government to put in place the right short-term policies.

"We support the government's decision to address the impact of the target on the competitiveness of energy intensive industries. Ultimately, it is the success of measures such as the Green Investment Bank, electricity market reform and the Green Deal that will decide whether we meet ambitious emissions targets."

Connie Hedegaard, EU Commissioner for Climate Action, tweeted: "UK announced emissions reduction of 50 per cent under 1990 levels by 2025. Congratulations to Cameron and Huhne for thinking big in difficult times."

Tom Delay chief executive of Carbon Trust, said the UK must have the right policy details in place to meet the ambitious targets.

"Today's announcement makes the UK the first country in the world to have declared a legally binding target on greenhouse gas emissions beyond 2020. This is significant. For business this is good news because it will provide what every business wants; greater certainty.

"The new budget and target is an important long-term signal to start a short term race. The evidence to act on climate change is compelling. Now we have set the long-term course we must fine tune the plan to reach it."

Friends of the Earth executive director Andy Atkins warned that a 'get-out clause' would dampen investor confidence.

"David Cameron's welcome decision to back Chris Huhne over the climate committee's call for tougher global warming action will boost his flagging green credentials.

"But the inclusion of a 'get-out clause', in case Europe doesn't cut emissions fast enough, creates needless uncertainty that could dent business confidence - and all just to save face for the Chancellor and Business Secretary, who opposed this agreement.

"The Cabinet row over carbon budgets is a clear warning that some key government departments are still only thinking about the short term and would scupper moves to develop a low-carbon economy.

"Ministers must now get on with the urgent task of fast-tracking the development of a low-carbon economy which will create new jobs and business opportunities and wean the nation off its costly addiction to fossil fuels."

Paul King, chief executive of the UK Green Building Council, strongly endorsed the commitment, saying the built environment should be at the heart of the UK's strategy for meeting the target.

"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. 43 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."

John Sauven, executive director of Greenpeace, called for minsters to deliver on short-term policy commitments.

"The Prime Minister deserves credit for putting a stop to attempts by the Treasury and Business Secretary Vince Cable to derail the UK's opportunity to be a leader in green growth. This announcement makes the creation of new jobs and factories in clean energy industries here more likely and puts the UK back in the race to compete with China, Germany and Silicon Valley in the clean technologies which will power our economies into the future.

"Now ministers need to build on their commitment by introducing the tough new power station pollution standards they promised in the Coalition Agreement, and giving the Green Investment Bank the powers needed to unlock billions in green investment."

Andreas Arvanitakis, associate director at Thomson Reuters Point Carbon, said the target will send a very strong signal to investors and should not be softened.

"This target would send a very tough policy signal. The very fact that it is long term is important for the investment cycle. Heavy-emitting companies will use that to inform their investment decisions from today onwards; that means that the target is met more cost-effectively from now until 2025. To wait a few more years and then make the same decision for 2025 would be more costly to the economy as a whole. Any softening of the target with get-out clauses weakens that signal."

Stig Schjølset, senior analyst at Point Carbon, said the carbon price floor, while helpful, will not get the UK close to meeting a 50 per cent reduction on 1990 levels by 2025.

"To meet a target of this scale the UK government would need to introduce much more radical emissions reduction policies than they currently have, which would have huge consequences for the cost of energy, such as mandatory carbon capture and storage for all major utilities, or a massive switch to both nuclear and renewables, combined with a nationwide switch to biofuels and electric vehicles in the transport sector."

Gaynor Hartnell, chief executive of the Renewable Energy Association urged the government to provide long-term investor confidence for manufacturers.

"We support the government's bold carbon decision, and we too want to see energy intensive industries remain competitive. The UK needs more manufacturing - green jobs making renewable energy equipment - as this is the growth industry of the future.

"Government must send a clear message it is determined to meet the renewables targets, and for that we need some stability in order to build investor confidence."

Richard Gledhill, head of climate change services at PricewaterhouseCoopers, welcomed Huhne's commitment to review the targets in 2014.

"There is a risk that moving too far ahead of the pack could leave energy and carbon intensive industry in the UK at a disadvantage. The proposed carbon floor price has already sparked concerns that UK energy users will have to pay more than their EU counterparts.

"Making the targets conditional on comparable efforts by other EU member states will address some of industry's concerns about competitiveness and carbon leakage."

Director general of the Institution of Civil Engineers (ICE) Tom Foulkes urged the government to iron out short-term concerns over the electricity market structure and planning delays.

"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.

"Government must recognise that even the most theoretically robust reforms to the investment environment will fail to be effective if construction is hindered by ongoing practical issues such as planning delays, specialist skills shortages and a stop-start approach to infrastructure development."