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Building up to 50 local electricity plants in London to decentralise the energy supply could cut the capital's emissions by 3.5 million tonnes, according to a report.
The study by London First recommends building power plants near users of energy such as housing estates, amenities and hospitals.
Moving these users 'off the grid' would reduce energy waste, claims London First, as heat and electricity is lost along the miles of cables used to connect centralised power plants to consumers.
Judith Salomon, director of planning and development at London First, said: "Decentralised energy has an important role to play in reducing Londons climate impact. At the moment there are few incentives in place and too many barriers preventing the success of local heat and power generation.
"Our report offers a series of recommendations which can deliver on the mayor's 25 per cent decentralised energy target, by unlocking the £7 billion of private sector investment required."
The government has set a target of reducing carbon emissions by 80 per cent by 2050, though is facing a rebellion over the fact that the proposed Climate Change bill exempts international flights and shipping.
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