Britain and other western countries are in danger of being left behind by China which is investing "furiously" in low carbon technology, aiming to profit from tough climate change targets in the next 20 years, a leading Tory warns today.

Tim Yeo, the chairman of the Commons energy and climate change select committee, says China may deliberately be acting the "bad guy" to divert attention from preparations for a low carbon economy.

China faced international criticism last year for scuppering the Copenhagen climate change talks after Wen Jiabao, the prime minister, declined to attend the negotiations. Mark Lynas, a witness to the negotiations, accused the Chinese of wrecking the talks by insisting on an "awful" deal so western leaders would be blamed.

In a new book on climate change – Green Gold: The Case for Raising our Game on Climate Change – Yeo says the west needs to be careful about depicting China as the world's bête noir. China insisted at Copenhagen that an 80% cut in greenhouse gases emissions by 2050 should be taken out of the agreement.

Yeo says in an interview it is a great mistake to assume China is "completely off the page" on climate change. "They are using this period furiously, while their economy is growing, to invest in low-carbon technology. They are rolling out a high-speed rail network in very short order, so that will cut the demand for domestic flights in China; they are investing quite heavily in renewable energy; they have got quite demanding vehicle standards; they have a quite impressive tree planting programme."

Yeo says the west could be in for a shock. "These are all things that will stand them in very good stead in the 2020s. The danger is that we wake up in 10 years' time and find they've overtaken us."

Yeo, an environment minister in John Major's government, warns in his book that parts of the world will become inhospitable for people alive today unless tough action is taken soon.

Britain must be prepared to embark on radical steps, such as the introduction of personal carbon trading, if it is to play a leading role in combating climate change. Under his plan, people would be given a carbon credit that would allow them to make, for example, one transatlantic and one short haul flight a year. People who fly more than that would have to buy carbon credits on the equivalent of a credit card.

"People have got to get used to making low carbon choices. If they have a direct incentive to do so they will think about it. Many times a day you have a choice between a low carbon option and a high carbon option, whether it is at home or at work. This would be one way of bringing the whole issue to life."