According to Business Green, George Osborne has vowed that the UK will not lead the rest of Europe in its efforts to cut carbon emissions, raising the prospect that the country's carbon targets could be watered down if the EU does not agree to more ambitious emissions reduction goals.
In a potentially explosive intervention, Osborne insisted the government will only cut emissions in line with its neighbours in order to ensure British businesses are not put at a disadvantage.
Speaking at the Conservative party conference, the chancellor accused environmental regulations of "piling costs on the energy bills of households and companies and argued that the government should not adopt green targets that damage the business sector.
"We're not going to save the planet by putting our country out of business," he said. "So let's, at the very least, resolve that we're going to cut our carbon emissions no slower, but also no faster, than our fellow countries in Europe."
He also stressed the UK accounts for less than two per cent of global greenhouse gas emissions, compared with 40 per cent from the US and China, warning that if the UK attempts to cut emissions too quickly, carbon-intensive businesses will simply migrate overseas.
Significantly, Osborne said he had "insisted" on a commitment that the UK's emissions reductions would not outstrip the rest of Europe as part of the agreement on the recent fourth carbon budget, which commits the UK to halving emissions against 1990 levels by 2025.
This is a reference to the deal brokered this summer, which saw the UK agree to the ambitious targets recommended by the Independent Committee on Climate Change, but only after the Treasury had secured a commitment to review the targets if the EU failed to agree to similarly ambitious targets for post-2020.
The comments threaten to reignite the cabinet row over the UK's emissions targets and represent a blow to Lib Dem ministers who have hailed the demanding emissions targets as a major achievement.
However, it remains to be seen if Osborne's commitment not to cut emissions faster than the rest of Europe can be realised.
Under the UK's Climate Change Act, the government is legally committed to cutting emissions by 35 per cent by 2022 and 50 per cent by 2025.
In contrast, the EU is only committed to cutting emissions 20 per cent by 2020, and while the UK and a number of other countries are lobbying Brussels for this target to be increased to 30 per cent, several member states remain resistant to any change.
Any attempt by Osborne to cut the UK's targets in the event the EU fails to agree a similarly aggressive set of post-2020 targets will almost certainly be opposed by the Lib Dems, committed green MPs in his own party, green businesses and NGOs, and the Independent Committee on Climate Change.
However, the speech will raise the prospect of a review of the UK's carbon targets that would see Osborne and other influential Conservative ministers push for a watering down of the previously agreed carbon budgets.