The UK would cut its greenhouse gas emissions by 60% by 2030 under world-leading proposals from the government's advisers on climate change.

Achieving the target proposed by the Committee on Climate Change requires a complete revamp of the nation's electricity market, making it virtually zero-carbon, as well as an overhaul of heat-leaking homes and the replacement of petrol-driven cars with 11m electric or plug-in hybrid models.

The CCC's 2030 target, if passed into law as previous CCC targets have been, would be the first legally binding 2030 target in the world. The target – which is a cut relative to 1990 emissions levels – is intended to lead the way to a legally binding 80% UK cut by 2050.

"We are recommending a stretching but realistic fourth carbon budget and 2030 target, achievable at a cost of less than 1% of GDP. We therefore urge the government to legislate the budget, and to develop the policies required to cut emissions," said Lord Turner, who is the CCC's chair, as well as chairman of the Financial Services Authority. "The case for action on climate change is as strong as ever: climate science remains robust and suggests that there are very significant risks if we do not cut emissions. And countries acting now will gain economic benefits in an increasingly carbon-constrained world."

UK emissions
UK emissions Photograph: Guardian Photograph: Guardian

Chris Huhne, the secretary of state for energy and climate change, said: "We know that the status quo will not be enough to cut carbon, which is why we are planning to undertake a comprehensive review of the electricity market, increase home energy-efficiency under the Green Deal and create a green investment bank. We will formally respond to the report in spring next year."

The CCC's carbon budgets are intended to reflect the levels of cuts required internationally to avoid the dangerous climate change, often defined as a rise of more than 2C above pre-industrial temperatures.

"If we don't do anything there are significant risks of dangerous climate change that we can't adapt to," said David Kennedy, the CCC's chief executive.

Kennedy accepts that the 2030 target proposed today is "highly ambitious". It will require 90% cut in power sector emissions, to be delivered by 40GW of new nuclear, wind and clean coal and gas power – equivalent to 25 large power stations. Delivering the investment needed to build this needs "fundamental changes" to the electricity market.

"We have had the most liberal electricity market in world – which had some benefits in a different era," said Kennedy. The market must be more "planned" he said, with the government putting out tenders for 25- to 40-year contracts to supply low-carbon electricity to cut investor risk and so the cost of capital. The government's proposals on electricity market reform are expected next week.

"What the government takes forward on this will be the most important test of their green credentials, said Kennedy. "It is absolutely crucial." He said there were three big tests of the coalition's pledge to be the "greenest government ever": radical energy market reform, a strong Green Deal bill to overhaul energy efficiency in homes and whether the government passes the 2030 target into law next year.

But David Porter, the chief executive of the Association of Electricity Producers, said: "If these huge sums [of required investment] are to be attracted to the UK, there must be a clear, credible and stable political and regulatory environment. We do not have that today, because our market is out of sync with the UK's highly demanding low-carbon agenda. It is [the electricity market] consultation which the industry awaits anxiously. The outcome will determine whether in the future we have a low-carbon electricity supply which not only meets environmental ambitions but is reliable and cost-effective."

• This article was amended on 7 December 2010. The original said the UK will cut its greenhouse gas emissions by 60% by 2030. This has been corrected.

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Damian Carrington

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