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They also recommend that this should be increased to 42% relative to 1990 (31% relative to 2005) once a global deal to reduce emissions is achieved.

The CCC says meeting these targets is necessary to contain the threat of climate change. Building a low-carbon economy, the CCC's first report sets out the analysis underpinning these recommendations and the proposed level of the first three carbon budgets covering the periods 2008-12, 2013-17 and 2018-22.

The budgets are a worldwide first, designed under the Climate Change Act, which also establishes the CCC as an independent advisory body to Government. The report sets out how the budgets can be met by using existing technologies, and by putting in place a range of policies to move to a low-carbon economy:

• Moving away from using fossil fuels towards using cleaner forms of generating electricity and heat including greater use of renewables (wind power, biomass heat and heat pumps), nuclear and Carbon Capture and Storage (CCS);
• By using energy more efficiently in our homes and office buildings and in industry, through better insulation, use of more energy efficient appliances and through reducing waste by turning lights off, shutting down computers and using air conditioning less;
• By reducing transport emissions, developing electric cars, improving the carbon efficiency of engines, developing use of sustainable bio-fuels, better journey planning and more use of public transport.
• Through purchasing offset credits (e.g. Clean Development Mechanism) to meet the 42% target, but not the 34% target.

These significant reductions can be achieved, the committee says, without harming the UK's economy and at a cost less than 1% of GDP in 2020. In other words, an economy that might grow by 30% in the period to 2020, would instead grow by 29%. The CCC advises that this is a price worth paying, given the long-term costs of inaction on climate change.

Chair of the CCC Lord Turner said:
"Climate change poses a grave threat to human welfare, the environment and the economy. We need to act now, in the UK and as part of a global agreement, to significantly reduce our emissions. It is not too late to tackle climate change, but it will be unless the world takes action soon, and the developed countries need to lead the way with strong commitments and strong delivery against the budgets.

"The budgets we have proposed are achievable given available and developing technologies, and provided the policies in place are implemented and where necessary reinforced. The reductions required can be achieved at a very low cost to our economy: the cost of not achieving the reductions, at national and global level, will be far greater."

Ed Miliband, Secretary of State at the Department of Energy and Climate Change, speaking at the launch this morning, welcomed the Committee's report:
"Plotting a course to a low carbon future here in the UK is vital if we are to reach our domestic goals and reach an international agreement. Carbon budgets will set our trajectory and send out a clear message that we will tackle climate change here in the UK.

"I would like to thank Lord Turner and the Committee for rising to the challenge and providing these very thorough recommendations. Carbon budgets will require a culture change where all important decisions will have to made on the basis of whether they fit the budget, whether emissions savings can be made elsewhere or whether they simply can't be done.

"We will give the report the in-depth consideration it deserves before responding in full but I am pleased to say that from 2009, carbon budgets will take their place alongside financial budgets, and become pivotal to policy decisions within the UK."

The CCC's previous recommendation, that the UK should reduce emissions of all GHGs by at least 80% by 2050 was accepted by the Government and included within the Climate Change Act.

The targets have been designed to ensure that the UK makes a fair contribution towards a global deal aimed at keeping global temperature rises close to 2 degrees Celsius above pre-industrial levels. If temperatures rise beyond 2 degrees, impacts could include large numbers of species becoming extinct, increased damage from floods, storms and droughts, decreasing agricultural productivity, melting of ice sheets and sea level rises.

The CCC has advised the Government not to purchase offset credits as part of their efforts to meet the 34% target. The Government should instead aim to make these emission cuts through domestic action by improving energy efficiency in buildings and industry, promoting fuel efficiency improvement in road vehicles and by using cleaner forms of electricity production such as renewable and nuclear power.

John Cridland, CBI Deputy Director-General, said:
"This landmark assessment sends the Government a strong message that immediate action is needed if the UK is to make a decisive shift to a low carbon economy by 2020.

"Business will have a crucial role to play in helping to meet greenhouse gas reduction targets. They are challenging, but UK firms are up to the task.

"Government must now decarbonise our economy at a manageable cost by encouraging greater energy efficiency in buildings and transport, new energy sources such as renewables and new nuclear plants, and by supporting carbon capture and storage (CCS) technology."

In response to the proposed targets, Dr. Keith Allott, Head of Climate Change at WWF-UK said:
"Committing to cutting the UK's emissions by 42 per cent by 2020 would set a world-beating target and inspire hope that we can still head off the worst impacts of climate change. Even better, Lord Turner has confirmed that this is both achievable and affordable. Now the Government must offer an immediate signal that it will accept this target. By doing so, it would inject some much-needed ambition into the climate change negotiations currently taking place at both EU and UN level."

In order to make the recommended cuts, WWF also believes that it is vital that the UK avoids locking itself into a carbon-intensive future by allowing new unabated coal-fired power stations.

Dr. Allott added:
"The Committee makes clear that new coal power stations without full-scale carbon capture and storage have no place in a climate-safe future. The Government must now accept that approving coal stations such as Kingsnorth, which do not have this in place from the outset, is simply not an option. The introduction of an emissions performance standard, limiting emissions from power stations, would help to prevent this from happening." 

Friends of the Earth's executive director, Andy Atkins, said:
"We're delighted that the Committee recognises that UK greenhouse gas emissions must be slashed by 42 per cent by 2020 if we are to play our part in avoiding catastrophic global warming - but this must not be conditional on reaching an international deal.

"The Committee clearly acknowledges the major threats that aviation and coal pose to our climate change targets - but it has fudged the question of what the Government must do.

"Ministers must scrap plans to allow UK airports to expand and not allow any coal-fired power stations to be built without carbon capture and storage. The Government must now get on with the urgent task of making the UK a low-carbon economy.

"Lord Turner's strong backing for urgent investment in green energy and cutting energy waste hits the nail on the head. This will not only cut emissions - it will create exciting business opportunities, new jobs and a safe, clean and prosperous future for us all."