The rabbit in Osborne's hat

George Osborne is known for pulling out a political flourish in his big speeches and today was no exception.

It was not quite on the same scale as his show-stopping announcement on raising the inheritance tax threshold, but it was there all the same: a hint that Britain's historic and ambitious carbon emission reduction targets could be watered down.

The Chancellor vowed that Britain would cut carbon "no slower but also no faster" than fellow European nations, adding: "We’re not going to save the planet by putting our country out of business."

This is much more significant than it might sound. Britain (and the EU) is currently signed up to cut carbon emissions by 20 per cent of 1990 levels by 2020, and by 80 per cent by 2050.

In recent months the Lib-Dem Energy and Climate Change Secretary Chris Huhne has been pushing for the 2020 target to be raised to 30 per cent and has built a coalition of the willing who agree with him. But his views are not shared around the Cabinet table, and in May it emerged that Vince Cable is among those worried about over-ambitious plans hitting business. This is self-evidently Osborne's view too, and I understand Transport Secretary Philip Hammond is also in the same camp.

The major significance of Osborne's announcement is that far from not just going for 30 per cent cuts, Britain could actually water down its 20 per cent commitment if other European countries don't hit their targets.

Aides insist this is "hypothetical" and hope at least the 20 per cent target will be met, but also made clear that if a Europe-wide reduction ends up being only 15 per cent then Britain will re-think its policies to make sure the country isn't being unfairly hit.

Expect this to cause fireworks within the Coalition, as well as from green groups and Labour - Ed Miliband was a key supporter of the idea. It is hard to see how it tallies with pledges to be the "Greenest Government Ever", and will be painted as sacrificing global leadership in eco issues in the quest for growth.

Osborne will have to hope part of his peroration comes true: "We do all this because we know that the sacrifices our country makes will not be made in vain."

Craig Woodhouse
Follow me on Twitter @craigawoodhouse