Britain's Treasury will set a legal framework next month to create a floor price for carbon emissions, the government said, whilst announcing a wider plan for encouraging low-carbon investments.
The floor price is a substantial part of the government's electricity market reform (EMR) proposal as it puts a minimum tax on carbon-intensive power generation, which indirectly rewards producers of greener energy.
The government also announced in its Carbon Plan that it would award £1 billion to Britain's first carbon-capture and storage (CCS) project by the end of this year and publish a second-round projects shortlist by May 2012.
CCS project developers in Britain are bidding for a share of a pot worth up to £9.5 billion to find the most adequate technology for catching and burying climate-warming emissions from gas and coal-fired power plants.
British Prime Minster David Cameron, Deputy Prime Minister Nick Clegg and Energy and Climate Change Secretary Chris Huhne launched the Carbon Plan on Tuesday, which also sets a deadline of June 2011 for the Department for Transport to formulate a strategy for electric vehicle infrastructure.
The government's Department for Business is also due to launch the Green Investment Bank by September 2012, and the first figures on how much it has lent and invested will be available by May 2013, according to the plan.
"This Carbon Plan sets out a vision of a changed Britain, powered by cleaner energy used more efficiently in our homes and businesses, with more secure energy supply and more stable energy prices, and benefiting from the jobs and growth that a low-carbon economy will bring," the three ministers said in a joint statement.
Huhne will this week sign a memorandum of understanding with the Local Government Association, clarifying how local government can reduce carbon emissions from operations.
The central government has already required a 10 per cent reduction in emissions from its own buildings by May.
Since last August, councils have been permitted to sell green energy produced on their own sites to the national grid as a source of additional income.
The government also announced it would provide funding for at least 1,000 new apprentices to be taught skills relating to energy-saving equipment, such as insulation installation and energy-efficient heating systems.
The apprentices will help support the government's Green Deal, a programme which allows households to receive energy-saving equipment paid for through savings made on their power and gas bills and which will start in autumn 2012.
"The Green Deal is likely to support 100,000 jobs by 2015 and up to 250,000 when it reaches its peak and will be great news for local economies with local firms encouraged to get involved in this new exciting industry," Huhne said.