The cost of household electricity bills is expected to rise by up to 15 per cent if Britain is to meet compulsory climate change targets announced yesterday.

Under the European Commission’s proposed measures for renewable energy supplies and lower carbon dioxide emissions, Britain will be required to increase its proportion of renewable energy from 1.3 per cent in 2005 to 15 per cent in 2020 – the equivalent of 20,000 wind turbines being erected in the countryside and offshore if Britain is to meet the target.

The investment required to get Britain’s energy supplies anywhere near the target mean that electricity prices are likely to rise 10-15 per cent by 2020 even before other inflationary factors are taken into account.

Britain’s 15 per cent target is below the average 20 per cent for the European Union’s 27 member states but it is the toughest in Europe because it requires the greatest level of change. Britain now has the third-lowest levels of renewable supplies and only Malta and Luxembourg are worse.

Wind, solar, tidal and other renewable energy companies were offered a huge fillip by the proposals, with Maria McCaffery, the chief executive of the British Wind Energy Association, describing wind energy as the next North Sea oil.

She said: “Britain could be a world leader in renewable energy if we have the will to make this vision a reality.”

Part of the renewables requirement will be met by the EU’s expectation that at least 10 per cent of road fuel will consist of biofuels rather than conventional petrol or diesel. But so onerous is the 15 per cent target that ministers expect up to 40 per cent of the nation’s electricity will need to come from renewable sources by 2020.

Only 5 per cent of today’s electricity is generated from renewable sources.

A legal obligation to reduce carbon dioxide emissions across Europe by 20 per cent by 2020, compared with 1990 levels, was put forward by the European Commission as part of the EU’s measures to tackle climate change. To help to achieve the 20 per cent target, which will rise to 30 per cent should a global treaty be achieved, the European emissions trading scheme (ETS) will be tightened up, particularly in widening it to include other greenhouse gases.

Each nation was set compulsory carbon emission reductions for sectors, such as road transport and domestic heating, which remain outside the ETS. Britain was set a target of a 16 per cent reduction, one of the highest in Europe.

Ireland, Denmark and Luxembourg will reduce emissions by 20 per cent but there was recognition that some member states should be allowed to catch up economically and technologically – Bulgaria and Romania are allowed to increase emissions by 20 per cent.

All the targets set by the proposals, which could be ratified and come into operation within a year, are designed to be legal obligations and any failure to meet them could land a member state with huge fines from the European Court of Justice.

José Manuel Barosso, the President of the Commission, expects the measures to create up to a million jobs and make Europe the world leader in low-carbon energy. He said: “This package represents an opportunity for Europe to show itself at its best.”

He said that it would cost less than 0.5 per cent of Europe’s GDP to implement measures to meet the 2020 targets, the equivalent of £2.24 per week for each EU citizen.

Hilary Benn, the Environment Secretary, welcomed the proposals as a signal to the rest of the world that Britain and Europe were confronting climate change head-on. “This plan shows exactly what we are aiming for globally – a comprehensive and effective agreement to tackle climate change, with the carbon market at its heart,” he said.

Others had serious doubts about the strength of the measures, including Professor Rajendra Pachauri, chairman of the Intergovernmental Panel on Climate Change (IPCC), which shared a Nobel prize last year with Al Gore for its work on warning world leaders of the extent and likely impacts of global warming. Professor Pachauri said at the World Economic Forum in Davos: “One would say that maybe what has come out is not up to expectations.”

Richard Lambert, Director-General of the CBI, said that Britain’s renewables target was daunting and potentially costly. It would take many years for renewables to reach fruition, leaving Britain little time to make huge strides. He gave warning of the risk that the measures would simply lead companies to move their carbon emissions to plants outside the EU.

“We have to actually cut carbon emissions, not shift them round the planet by undermining energy-intensive industries based in Europe and discouraging future investment into the Continent,” Mr Lambert said.

Peter Ainsworth, the Shadow Environment Secretary, said that the Government had allowed carbon emissions to rise over ten wasted years of talk and dithering. He added: “We have an enormous mountain to climb to reach our renewables target.”

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