Margaret Beckett has welcomed a European Commission recommendation that all EU states should cut their greenhouse gas emissions.
The foreign secretary said the proposal "puts the EU on an accelerated pathway to becoming the world's first low-carbon economy".
A long-awaited EU energy strategy review calls on government to cut greenhouse gas emissions by 20 per cent over 13 years.
The new target is much more ambitious than the existing eight per cent decrease in 1990 levels by 2012.
"The establishment of a low-carbon global energy economy is an imperative not an option," she said.
The review also wants 20 per cent of energy to come from renewable sources by 2020, up from seven per cent today.
Use of biofuels should increase to ten per cent of total fuel use and energy efficiency must also improve by 2020, the review recommends.
Individual governments will remain free to choose nuclear power but the review suggests European-wide rules on safety standards may be introduced.
But leading European business lobby UNICE have criticised proposals and said: "Far-reaching unilateral EU targets for reducing emissions of greenhouse gases are unacceptable."
In a statement the lobby said: "Until the rest of the world follows EU leadership in the field of climate change, then such targets could jeopardise the future of business within the EU.
"EU business strongly supports the battle against global climate change but the EU cannot win this battle by going it alone."
Ms Beckett said European actions would encourage other nations to follow. She said: "If we want China, India and other partners to agree on a post-2012 climate framework, we need to back this up with our actions in Europe.
"The challenge now is for member states to put in place the policies and instruments necessary at national level to implement the commission's vision. Contributing to this will be a top priority for British diplomacy," she announced.