Oil and Gas

FTSE 100 firms on track to meet UK 2020 CO2 target

* FTSE 100 firms on track to cut CO2 by 34-42 pct by 2020

* Annual reduction pledge slightly above what’s needed-CDP

* Materials, energy, utilities pledged lowest commitments

LONDON, Jan 7 (Reuters) - Companies in the FTSE 100 are on track to meet Britain’s 2020 carbon emissions targets, despite lax commitments from the heaviest polluters, a report showed on Thursday.

On average, FTSE 100 companies have pledged to reduce their greenhouse gas emissions by 2.5 percent annually, in line with what is needed to reach the first milestone en route to deep cuts by 2050, the Carbon Disclosure Project (CDP) said.

The UK Climate Change Act, passed in 2008, sets an emissions cut target of 80 percent below 1990 levels by 2050, with an interim target of a 34-42 percent cut by 2020.

The CDP said annual cuts of 2-3 percent are needed from companies in order to meet this.

The 24 firms in the FTSE 100’s energy, basic materials and utilities sectors, which collectively account for 87 percent of the index’s total emissions, have pledged to cut by only 1.2 percent per year.

“The targets set by the most carbon intensive sectors, responsible for the majority of FTSE 100 emissions, are not sufficiently ambitious and will not deliver reductions required by the UK Climate Change Act,” the CDP said.

The report showed that the basic materials sector, which accounts for 27 percent of FTSE 100 emissions and includes mining companies like Rio Tinto RIO.L and BHP Billiton BLT.L, forecasted an annual rise of 1.5 percent, making it the only sector that said it will grow emissions.

Utilities including Scottish & Southern SSE.L pledged annual cuts of 2.4 percent, while energy (oil and gas) companies said they would cut by 2 percent per year.

Firms that fail to reduce their emissions significantly from 2013 may also be forced to buy additional carbon permits under the EU’s emissions trading scheme, a move that could raise European carbon prices. (Reporting by Michael Szabo; Editing by Marguerita Choy)