It said the government's Climate Change Levy is flawed because it taxes energy use and not pollution from carbon dioxide (CO2). Neither has it reduced emissions of the greenhouse gas.

"The UK's emissions of carbon dioxide increased by 1.5 percent last year, so the challenge is to introduce economic measures that discourage the burning of fossil fuels," society vice-president Eric Ash said in a statement.

"The Climate Change Levy fails to meet this challenge fully," he added.

Introduced in April 2001, the Climate Change Levy is a tax on commercial and industrial consumers on the electricity they use. It is designed to improve energy efficiency and is part of the government's plan to reduce emissions of greenhouse gases.

The probe, which will be completed by the summer, is launched ahead of a government consultation document on general energy policy expected next month.

It comes just days after a government report said rising sea levels, droughts and floods will ravage the British Isles by the end of the century as climate change accelerates faster than expected.

The society's investigation will look at different economic ways to reduce greenhouse gases and whether a carbon tax will push up electricity and petrol prices.

"The unpalatable truth is that we need to make cuts of up to 60 percent in our greenhouse gas emissions during this century to avoid the worst effects of climate change," said Ash.

"That will require radical changes in the way we all use energy to heat our homes and run our cars."

A spokesman for the Royal Society said it has already told the government it should rethink its policy.

"The most recent set of figures on carbon dioxide emissions were only published last month. The fact that they show a rise emphasises that, although we will probably make the Kyoto targets, we are moving in the wrong direction overall," he said.