UK should mull tougher CO2 goal: gov't committee

Former Conservative Shadow Environment and Transport Secretary Tim Yeo delivers his speech at their annual conference in Bournemouth.

LONDON (Reuters) - Britain should be ready to set tougher goals for greenhouse gas emission cuts to combat climate change, regardless of world leaders' failure to reach a legally binding climate pact, a UK Parliament committee said on Monday. "The government must be ready, if needed, to establish credible emissions reduction pathways that go well beyond what is currently regarded as politically possible," an Environmental Audit Committee (EAC) report to the British government said.

The committee recommended that Britain moves to a 42 percent emissions cut by 2020 from 1990 levels, regardless of the failure of U.N. talks in Copenhagen last month to reach a legally binding global climate pact.

In 2008, Britain's chief climate adviser urged a cut of at least 34 percent from 1990 levels by 2020, rising to 42 percent if a global emission reduction deal was reached.

"Emissions may be flatter this year and next year because of the recession but we have to do more even to meet the 34 percent target," Tim Yeo, the EAC's chairman, told Reuters.

A tougher target would strengthen Britain's contribution to limiting rising global temperatures. Scientists believe temperature rises should be limited to below 2 degrees Celsius to avoid the worst effects of climate change.

"We're almost past the point at which we can do that. If we can make a really high probability of not going above 2 degrees, that is a realistic and achievable target," Yeo said.

The world is already set to exceed the 2 degree limit.

CARBON BUDGETS

Britain has set itself three legally binding "carbon budgets" until 2022 as part of a national goal toward cutting emissions by 80 percent below 1990 levels by 2050.

UK emissions fell by 2 percent in 2008 due to reduced industrial output due to recession.

But the government should not "bank" any over-achievement from its first carbon budget (2008-2012) into its second budget period (2013-2017), the Committee said.

It should also steer clear of relying on the price of carbon in the EU's Emissions Trading Scheme (EU ETS) to drive low-carbon investment as it is too low and volatile.

Regulatory measures for industry or even direct market intervention to establish a carbon price floor should help boost prices to make such investments economically viable, the Committee said.

"A carbon tax is clearly another option but nobody can predict the elasticity of the response," Yeo said.

The UK should only accept carbon offset credits from countries with similar national emissions limits and consider discounting their value, the Committee recommended.

"To encourage public and private sectors to reduce their own carbon footprint we should penalize people who rely on offsets by not allowing them 100 percent of the value," Yeo said.

Firms and individuals can buy offsets generated by clean energy projects in poorer nations to reduce their emissions.

The government is aiming to meet its carbon budgets without using overseas carbon offsets but has not ruled out using them if a global climate deal enforced tougher emissions cut targets.

(Reporting by Nina Chestney; Editing by Keiron Henderson)