Britain should adopt the world's toughest climate change target and slash nearly half of its greenhouse gas emissions in the next 12 years, the Government's new climate advisory committee said yesterday in its first report.

Emissions of carbon dioxide and other gases causing global warming should be cut by 42 per cent on 1990 levels by 2020, as long as there is a new global climate deal in a UN meeting in Copenhagen a year from now, said the Committee on Climate Change.

The recommendation for what is a massively ambitious and world-beating target – and a costly one for electricity consumers, who will face higher bills, perhaps of up to £500 a year – brought plaudits from environmentalists, while the Government itself was obliged to put a positive face on a goal which is considerably in excess of what it had hitherto been contemplating.

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The 42 per cent cut will require accelerated effort across all sectors of the economy if it is to be realised, with the committee pointing at massively increased wind power, new nuclear power stations, a big boost to energy efficiency and a substantial increase in electric vehicles as key ways forward.

In fact, 12 years from now, 40 per cent of vehicles on Britain's roads will probably be battery-driven or petrol-electric hybrids if the goal is realised, said the committee chairman, Lord Turner of Ecchinswell, who as Adair Turner was the director general of the Confederation of British Industry.

The changes will cost "less than one per cent" of Britain's GDP (in the range 0.3 to 0.8 per cent) and will push up domestic electricity and gas bills (renewable energy is more expensive). They could tip 1.7 million households into fuel poverty, so the Government must make provision for this, the committee warned.

The full cost per household has not been calculated, but committee sources suggested a ballpark figure could be arrived at by dividing one per cent of GDP in 2020 – expected to be £15bn – by the number of households in Britain, expected to be 25 million. This would give a figure of £600 per household, at the top end – and 0.3 to 0.8 of that would be £180 to £480.

However, despite the costs, the high 2020 target is the only way to go, the committee said, if the UK is to achieve its long-term goal, which the Government accepts, of cutting emissions by 80 per cent by 2050.

The Climate Change Committee has been set up under the Climate Change Act which came into force last week. Its main purpose, with all-party support, is to make Britain's emissions reductions programme legally binding whatever government is in power.

The programme will be driven by five-yearly "carbon budgets", and the purpose of the Climate Change Committee is to recommend the contents of the budgets, and to police their implementation, reporting to Parliament annually. Ministers may ignore its recommendations, but there would be a high political price in doing so.

Yesterday the committee unveiled its first three proposed carbon budgets, for 2008-12, 2013-17 and for 2018-22, but the overall emissions reduction target they are designed to deliver was the eye-catching measure.

Lord Turner and his fellow committee members want UK Plc to be spewing forth 42 per cent less of climate-changing gases such as carbon dioxide and methane than it was in 1990, in only 12 years from now – a 31 per cent reduction on the 2005 figure. This target is contingent on a new version of the Kyoto protocol, the international climate change treaty, being negotiated successfully at the UN's December 2009 world climate conference in Copenhagen. If a global deal is not secured, the committee says, the Government should commit itself to a unilateral reduction of greenhouse gases by 2020 of 34 per cent.

Central to meeting these targets, Lord Turner said, would be a rapid decarbonisation of power generation, which he anticipated would be greater than 90 per cent by 2030. This is because a low-carbon economy will use more electricity – for example in heating, and in battery-driven vehicles.

The Mayor of London, Boris Johnson, has issued a challenge to the motor industry to produce an electric car for a large family, and he promised to get one as soon as it did. "Come on, folks, you must be able to do it," he said. "I don't want to buy another internal combustion engine, there is a market waiting to be satisfied, and if that isn't an economic stimulus, I don't know what is."

Lord Turner said the committee expected that any new coal-fired power stations would only be built if they were to be retrofitted with the new technology of carbon capture and storage (CCS) in the early 2020s. If the Government accepts this, it may be the death knell for the proposed coal station at Kingsnorth in Kent.

The man charged with taking these recommendations on board and incorporating them – or not – into government policy is the new Climate and Energy Secretary, Ed Miliband, who said moves to reduce emissions would not just bring about changes in policy but a "revolution in thinking" in which all important decisions would have to take account of the carbon budgets.

The Government will set the first three binding five-year carbon budgets alongside the fiscal Budget in the spring and publish its full response to today's report in summer. Green campaigners hope it will be adopted in full.

Cutting carbon: Five ways to reduce greenhouse gases by 2020

Electric Cars

Pure electric and hybrid petrol-electric vehicles can help contribute to "deep emissions cuts" in road transport, says the committee. As many as 40 per cent of all vehicles on British roads may be hybrid or electric by 2020. Improved fuel efficiency of new cars and vans can also provide massive CO2 savings.

New nukes

Even though it is controversial for some environmentalists, nuclear power is put forward by the committee as a conditional option for decarbonising electricity generation.

More windmills

A big increase in wind power, onshore and offshore, especially the latter as there is room in the sea and fewer planning delays. Wind power is intermittent (the wind doesn't blow non-stop) and costly but it has huge potential.

Burying carbon

The new technique of carbon capture and storage will probably come on stream in the next 10 years. It takes the CO2 out of power station waste gases, liquefies it, and pipes it down into deep geological strata to be stored.

Loft and wall insulation

Energy-efficiency measures in homes, such as insulation, have the potential to make huge savings in CO2 – so more government grants are needed. There is a similar potential for energy-efficiency measures in industry and business.