The Committee on Climate Change (CCC) has warned government that it risks missing the third and fourth carbon budgets unless there is a “significant increase in the pace of emissions reduction.”

The committee noted that, while the UK has met the first carbon budget and will likely hit the second, the costs and risks associated with moving to a low-carbon economy will increase the slower emissions are reduced in the run up to the 2020s.

Government was praised by the CCC for its progress in some areas of low-carbon investment including the level of new wind capacity, loft insulation and cavity walls in residential buildings. However, the committee was critical over the progress of low-carbon heat and commercial energy efficiency.

Addressing solar’s performance, the CCC noted that, although down on last year, solar installations continued at a high level in 2012 (0.7GW). Over half (0.4GW) of the new capacity was installed after cuts to the FiT in April 2012 which led CCC to determine that solar generation is still profitable at the lower tariff rates.

The committee were critical of the Green Deal- government’s flagship environmental policy- saying that the scheme offered weak incentives and relied on a market-based approach to “address significant non-financial barriers to uptake” and that it required “most households to bear the full cost of these measures.”   

David Kennedy, chief executive of the CCC commented: “Although the first carbon budget has been comfortably achieved and the second budget is likely to be achieved, this is largely due to the impact of the economic downturn. There remains a very significant challenge delivering the 3% annual emissions reduction required to meet the third and fourth carbon budgets, particularly as the economy returns to growth.

“Government action is required over the next two years to develop and implement new policies. A failure to do this would raise the costs and risks associated with moving to a low-carbon economy.”

Responding to the report, Caroline Flint, Labour's shadow energy and climate change secretary said: “This warning should be a wake-up call for the government. David Cameron promised to lead the 'greenest government ever' but on his watch investment in clean energy has hit a seven year low, fewer people are making their homes more energy efficient and now carbon emissions are rising.

“To get back on track to cut the country's carbon emissions – and give a shot in the arm to Britain's flatlining economy – David Cameron should set a decarbonisation target to clean up our power supply by 2030.”