The United Kingdom is set to become a world leader on clean energy and climate policy, after announcing an ambitious plan to halve carbon emissions by 2025. After weeks of heated parliamentary debate, the 50% cut to emissions will be based on 1990 levels, with the final amount to be averaged out over 2023-27.

Back in 1990 total greenhouse gas emissions for the UK were 778.3 million tonnes carbon dioxide equivalent, compared to 582.4 million tonnes carbon dioxide equivalent in 2010. But last year actually saw an increase in carbon emissions in the UK, with total greenhouse gas emissions up 2.8% from 2009 levels.

In May UK PM David Cameron declared that his coalition government would be “the greenest government ever” and this promise to cut emissions is the most ambitious climate plan of the developed nations.

Greg Barker UK Environment Minister spoke to ABC Radio’s Fran Kelly on Breakfast this morning, explaining the reasoning behind the new climate policy: ”That’s not out of just a commitment to the green agenda for it’s own sake but a very real and pragmatic recognition that that way lies economic prosperity and long-term growth. Our supplies of oil and gas are rapidly diminishing from the North Sea and we want to wean our economy off expensive, imported foreign fossil fuels and tap into the huge growth market of renewable, clean technology and make our economy much more energy efficient and really carve out a market leadership position in these fast-growing sectors.”

This is a contrast to how the Australian government and opposition frame much of the debate around protecting current investments, rather than building new markets and new technology, writes Giles Parkinson at Climate Spectator.

“It’s technically and economically more challenging, in terms of direct costs, for the UK to do this than Australia,” Matthew Wright, executive director of Beyond Zero Emissions, told Crikey. Wright noted that Australia has the geographic resources for renewable energy — wide open spaces, some of the windiest locations in the world, geographical diversity — that the UK doesn’t have.

But how does a country cut 50% of its emissions, while claiming it won’t affect economic growth?

As Barker explained this morning, it’s through a variety of different programs aimed at cutting emissions and investments in clean energy — and also largely thanks to the previous government, who already helped the country cut 25% of its 1990 carbon emissions before Cameron gained power. An emissions trading scheme was started in the UK back in 2002, although Barker says business hasn’t embraced the plan as much was previously hoped.

The Cameron government has agreed to a carbon floor price — setting the minimum price for carbon — although details of exactly what it will be has not been announced yet. A green bank is being established to invest in off-shore wind projects. A renewable heat program is being developed, as is a home improvement program to help make houses more energy efficient. The government will invest in the world’s large carbon capture and storage program.

All these smaller programs by the UK government are expected to add up to a cut in emissions, and these smaller programs are crucial, says Wright: “They know that without the complimentary measures you don’t get the outcome you intended.”

Barker explained that while government can make policies, the it’s business that needs to be on-board cutting emissions and focusing on a cleaner economy, telling the ABC: “We do recognise that ultimately it’s going to be business, the private sector, who will deliver this transformation and the government has to got to work in partnership with business, with investors to create the right framework for growth.”

Why can the UK set strong targets when Australia struggles to pass a carbon tax?

It’s mainly thanks to bipartisan agreement on the issue. As a contrast, Australia agreed to a 5% cut in emissions by 2020, which currently it is not even on target to hit.

However, despite the political issues, Australia has a variety of advantages for renewable energies, one big one being that the UK is moving to renewable energy after weaning itself largely off coal energy back in the late 80s-early 90s and moved towards natural gas. Now it’s having to spend and invest in new energy infrastructure again, while Australia would be able to bypass the gas step.

The UK has kept a “get out of jail free” card for itself, with an option in 2014 to review the plan if other European nations are not also working towards cutting emissions.

There’s a fairly low chance of that happening, says Wright, with most countries moving to renewables and no countries moving away from them. Germany has set itself a goal of being 100% powered by renewable energy by 2050. Spain is has increased investment in renewable energy from 500 million euros per year up to 2.5 billion euros this year, even in the midst of difficult economic times. France, a country dependent on nuclear technology, is abiding by its 20% renewable energy target. Even China is increasing its large investment in solar and wind energy and taking a moratorium on its nuclear energy investment after the Japan earthquake and debate over the Fukushima plant.

Plus, the more countries that get on board with renewable energy, the cheaper it becomes.