Birmingham City Council has no idea if it is on course to deliver on a flagship policy of a 60 per cent cut in carbon emissions by 2026, an investigation has found.

A report by the council’s internal auditors found there are serious concerns with the policy and a high risk that carbon reductions may not be achieved, leading the council to incur “significant financial costs of several million pounds” per year.

The target, which promised a 60 per cent cut in carbon emissions, based on levels in 1990, led to pioneering policies such as the Birmingham Energy Savers, which is cutting household fuel bills, and the installation of combined heat and power generators in public buildings.

But the report concludes that no formal measures are in place to monitor the council’s progress, and that if the target is not being met this will cause the council “reputational damage”.

It states: “The climate change and sustainability team are unable to confirm the council’s current position against both the Government’s legally binding target of a 26 per cent reduction in carbon emissions by 2020 and the council’s own target of 60 per cent by 2026.

“Therefore we have not been able to determine if the council is making satisfactory progress towards meeting the established targets or that actions currently being taken will enable the council to achieve set targets within the required timescales.”

It appears that the council’s latest figures for carbon reduction are at least two years out of date and that some council departments do not monitor their own reductions and information about emission rates from the remainder of the city, such as business, residential and transport activity is poor.

The Birmingham Audit report is dated May 2, just before the local election at which Tory-Lib Dem coalition lost control to Labour.

Climate change was a flagship policy for former deputy leader Paul Tilsley and progress on this was recognised with a green flag award from the Government’s official council watchdog the Audit Commission.

But it is suspected that not all his Tory-Lib Dem colleagues were as keen on carbon reduction.

If targets are being met and exceeded then the council can not only save on fuel costs but also on a government payment called the Carbon Reduction Commitment Allowance. If falling short then those costs to the local taxpayer rise.

Labour’s new cabinet member for green, safe and smart city Coun James McKay (Harborne) recognised that there had been progress on the agenda under Coun Tilsley, but added that more needs to be done.

He is setting up a green commission, made up of academics, experts and council officials, to improve monitoring and perhaps even reassess the target.

Its first duty is to conduct a stocktake to find out where the city stands. This could include working out how much of the cut is a result of the reduced economic activity due to the recession and how sharply this will rise if business activity picks up.

He said: “There is a huge question mark over precisely how much of an impact has been made and if our targets are appropriate or achievable. The council’s new administration is determined to make Birmingham one of the world’s leading green cities.

“To build the public support we will need to put this into practice – so it is vital we are open and honest about progress so far.”

A second problem, once the monitoring has been done, is that the more reductions are achieved, the harder it gets to find new ways – but Coun McKay believes that there is a major opportunity for progress among the city’s 400,000 households, many of who have yet to install adequate double glazing, loft and wall insulation.

It is estimated that about 90,000 properties are fully insulated leaving 310,000 where bills can be cut. The Birmingham Energy Savers scheme is offering to insulate 15,000 homes under the Government’s Green Deal. Householders then pay back the costs, on average about £6,500 per property, through a levy on the much reduced fuel bill.

There is a guarantee that the levy will never be higher than the bill would have been and all homes will save money.

Birmingham Friends of the Earth spokesman Joe Peacock welcomed the green commission but warned: “We have to understand what a city with 60 per cent less carbon will look like in terms of transport, industry, the economy, and then work out what steps need to be taken to achieve it.”

He added that Birmingham Energy Savers is a ‘seriously good scheme’ and needs to be scaled up, but warned that the authorities had been poor on low carbon transport policy.