What has been announced?

The European Commission has presented draft laws designed to tackle climate change by creating binding targets to reduce carbon dioxide emissions across the EU by 20 per cent by 2020, using 1990 levels as a baseline.

As a means of achieving this the Commission wants to boost energy production from renewable sources to 20 per cent of the EU total, from the current level of 8.5 per cent. It also aims to ensure that 10 per cent of all vehicle fuel comes from biofuels by 2020.

Individual targets have been set for each member state to achieve these broader goals. The plan must still be approved by members and the European Parliament – a long-winded process that is unlikely to be achieved before next year. Much horse-trading and lobbying is likely in the interim.

What does this mean for Britain?

Britain has been set the ambitious target of producing 15 per cent of its total energy from renewables by 2020, up from 1.3 per cent on the 2005 figure. In terms of electricity production, that means an increase from about 5 per cent now to an estimated 35-40 per cent by 2020. If this is to be achieved it will mean a huge drive to build wind turbines, tidal power stations and solar energy plants.

How will the cuts be achieved?

Europe’s emissions trading system, under which industries buy or sell emissions credits covering different greenhouse gases, is to be strengthened and expanded. It will gradually encompass all big industries, such as chemical, aluminium and aviation, as well as power and steel. Most immediately, it is being expanded from dealing only with carbon dioxide to incorporate two other greenhouse gases, nitrous oxide and perfluorocarbons.

Big polluters will eventually pay billions of dollars per year in emissions trading charges. Governments will use this to bolster the development of clean energy. About 40 per cent of total emissions are to be covered by this scheme.

Any other initiatives?

Countries that are unable to hit their targets will be permitted to buy credits from other member states to meet them. The Commission also wants to create economic incentives to assist the capture and storage of carbon. State aid for green power generation schemes will also be permitted.

How much will all of this cost?

The Commission estimates that the overall cost will be 0.5 per cent of GDP – or €60 billion (£45 billion) a year across the EU. For individual consumers, that amounts to about €3 a week. The Commission expects the measures to push up electricity prices in Britain by 10-15 per cent by 2020, up to three times as much as the European average. The cost to Britain will probably be relatively high because it has been set very ambitious targets.

What about the benefits?

The community claims that the cost of inaction is far higher. It says the plan will reduce the need to import energy worth €50 billion per year and also help to avert the costs of climate change, which could exceed 20 per cent of GDP. It also claims that the package will make Europe the centre of a new global clean technology industry that could create a million jobs by 2020.

Aren’t biofuels bad news?

Biofuels have been blamed for contributing to the problem of climate change by causing deforestation and forcing agricultural land in developing countries out of use for food production. The community says it will introduce strict criteria to prevent this, but it has admitted that there are holes in its proposals. One problem of certification yet to be solved is how to ensure that knock-on effects are taken into account, such as when a bio-firm takes over agricultural land and the people who used to farm it have to move into forest areas to grow their food.

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