A year ago, at Kyoto, the world reached an historic agreement to combat climate change by cutting greenhouse emissions. Developed countries would reduce emissions 5.2 per cent below 1990 levels by 2010. The US agreed a 7 per cent cut, having started the negotiations at 0 per cent. Europe took 8 per cent.

Last week, 160 nations gathered in Buenos Aires to put the seal on a plan to combat climate change. At 3am on Saturday - nine hours after the conference was due to end - and with the chief negotiators still locked in discussion, the G77 developing countries' representatives picked up their bags and walked out. By 5am, after a good deal of talking - including a fair bit of plain language from me - we had put together a package which brought them back and satisfied everybody.

The backdrop to the conference was provided by the daily reports from Honduras and Nicaragua, confirming the thousands who had died and the hundreds of thousands who had lost their homes in Hurricane Mitch. This is just one of a series of disasters over the past year that have heightened public awareness about the dire consequences of climate change: forest fires in Indonesia, floods in China, heat-waves, droughts and storms around the globe and the ice caps melting. This is a warning the world ignores at its peril.

The science is no longer in doubt. This year is set to be the world's hottest since records began. Four of the five hottest years in the UK since 1650 have occurred in the past ten years. This is a long-term problem but it requires immediate action.

When Labour took office in May last year, progress on international agreement to tackle climate change had stalled. The voluntary targets for restraining greenhouse gases, agreed at Rio in 1992, had been ignored by most countries.

At the UN special session in New York in July last year, Tony Blair left no one in doubt about the priority the new UK government placed on the environment and climate change in particular. Indeed his speech was taken as a sharp prompt for other developed countries to take the matter more seriously. That plea was heeded, as the Kyoto agreement showed.

Last month, the UK became the first country to consult in detail on a domestic programme to combat climate change. We showed how greater energy efficiency, a better transport policy, fiscal sticks and carrots, and an increase in renewable energy could take us towards our targets. A series of government measures, including our transport policy, emphasis on urban renewal and household growth on brownfield sites and promotion of renewable energy, all reinforce the drive for energy efficiency.

The main purpose of the Buenos Aires conference was to turn the targets agreed at Kyoto into practical reality. At Kyoto I said we had a two- to three-year "window of credibility" through which to move towards ratification. But less than 12 months from Kyoto, we have achieved the following:

l All the targets for the years 2008-12 agreed at Kyoto remained intact.

l All the leading industrialised countries, including the USA, have signed the protocol - an important precursor to final ratification.

l All the flexibilities are the same ones we agreed at Kyoto (trading emissions permits to encourage cost efficiency; credits for projects in other developed countries; credits for helping developing countries with clean technology). Everyone agrees we must have proper rules to control them. Now we have set a timetable for agreeing those rules within two years.

l We have made a priority of transferring technology to developing countries to aid "cleaner growth".

In short, Kyoto set the targets. Now we have a plan of action to make them work: a working programme, working groups and a working timetable.

I am proud of the role this country played in brokering a world agreement in Kyoto last year, and Britain has continued to set an example. We have agreed a legally binding target of a 12.5 per cent cut in greenhouse gases. We are well on our way to achieving this target and want to go further with a 20 per cent cut in CO2 emissions. It is an ambitious target, but I am confident we can achieve it.

And we can do so without damage to British industry or society. There is no trade-off between prosperity and the environment. Tackling climate change is an opportunity, not a burden. This is about gain not pain.

Better-insulated homes use less energy but they are also more comfortable and cheaper. A better public transport system reduces exhaust fumes, but it also offers all of us more choice and cuts traffic delays. A more energy-efficient industry will be cleaner but also more competitive, as the Marshall report on economic instruments and business use of energy has argued. And rather than costing jobs, there is a world of opportunity opening up for British business which is already at the cutting edge of the new environmental technologies.

This government intends to put the environment at the heart of decision-making, alongside economic growth and social justice. We will shortly be taking another major step forward.

We are used to judging the economy's performance through statistics such as GDP, inflation and employment figures. I will be announcing a new set of figures by which to measure not just the standard of living but also the quality of life, in terms of such everyday concerns as health, jobs, air quality and wildlife.

I intend that these "quality of life" indicators will, over time, become just as useful and familiar as the conventional economic indicators. They will help government, business, local authorities and individuals to do their bit for sustainable development.

Putting sustainable development centre-stage is the right thing both for us and for future generations. I hope you agree. I know from Radio 4's Thought for the Day that the Bishop of Liverpool - like me, an ex-seafarer - is on my side.

The writer is the Deputy Prime Minister