Parent company Centrica pledged to cut energy use in its own UK buildings by 10 percent this year and is working on developing a fuel cell domestic boiler that could halve household CO2 emissions.

"We have reason to believe that in market turnover terms, this space will be worth several billion pounds a year in the next few years," the unit's new managing director, Gearoid Lane, previously Centrica's director of energy procurement, told Reuters.

Centrica said it would take a while for the earnings to become material and its shares were down 0.7 percent to 386-1/2 pence by 0831 GMT.

The average UK home emits five tonnes of CO2 a year, accounting for about a quarter of the household's total emissions, says British Gas. Another quarter comes from travel and the rest indirectly from leisure activities and the consumption of food, clothing and furniture.

Installing a fuel cell boiler, which British Gas is developing with Ceres Power, could cut around 2.5 tonnes of CO2.

"We don't have the absolute blueprint for taking these to manufacture, but we're in late stage development," said Lane. "You won't see something later in 2007, but you won't have to wait four or five years."

British Gas said demand for microgeneration alone -- such as fuel cell boilers and solar panels -- might be worth approx 1 billion pounds annually in another five years.

The group has formed a partnership with some local authorities, which will give council tax discounts of up to 500 pounds for households that install solar panels.