Ed Miliband yesterday admitted that the nascent Department of Energy and Climate Change (DECC) faced challenges embedding the principles of carbon management in other government departments, but insisted progress was being made and that a new initiative would be launched this year to encourage civil servants to adhere to carbon budgets.

Speaking in his first appearance before a newly formed oversight committee, the recently appointed energy and climate change secretary said that a sub-committee will be set up by DECC this year with the specific goal of driving change across Whitehall.

He said that carbon budgets could be traded between departments if some fail to meet their allowances, while those departments that missed carbon targets could also be allowed to buy in carbon credits from the Clean Development Mechanism.

He argued that while there were difficulties to be faced when instigating wide-scale changes in managerial culture, "to some extent we're pushing at an open door," adding that the the health and education departments in particular were already making major efforts to address their carbon footprint.

Confirming one of Whitehall's worst-kept secrets, Miliband also admitted that there had been "challenges" integrating the energy and climate change portfolios of his new department.

Reports have suggested tensions within DECC between energy-based civil servants – formerly based within the Department of Business, Enterprise and Regulatory Reform (BERR) – and those focused on climate change, formerly part of the Department for the Environment Food and Rural Affairs (Defra).

Miliband said it "would be wrong to pretend there aren't challenges", but insisted there was a "wide welcome for the need to have both parts of the jigsaw in the same place".

Moira Wallace, acting permanent secretary of DECC said that the department was addressing the risk of cliques by deliberately integrating staff.

The department's international group now covers energy and climate change together, integrating two separate groups of civil servants, she said, while another team of civil servants charged with liaising with consumers has been given a brief of communicating on energy and climate change at the same time.

"We didn't just want to put a rubber band around the two areas, we wanted to integrate ways of working," said Wallace.

In response to questions about the long wait for grid connections that has been highlighted as the main barrier to the completion of renewables projects, Miliband said the energy industry was working on a replacement for the current queuing system that should be in place by April 2010 and would see an early connection offered to projects that already hold planning consent.

In a clear signal to grid operators to resolve the problem quickly, he added that were the deadline to be missed, then DECC "will do it for them".

Miliband also defended the European Emissions Trading Scheme (ETS), which has seen the price of carbon credits collapse in recent months, insisting that a higher carbon price would be established once 100 per cent auctioning of credits to the power sector kicks in from 2013.

In addition to promoting the UK's renewables strategy, Miliband defended criticism of its proposals for a new wave of nuclear reactors, arguing that just because recent nuclear projects in Finland had suffered delays that was "no reason to think" that the UK would suffer similar problems.

On new coal, Miliband refused to comment on Guardian reports that he was grappling with the Treasury for more money to fund carbon capture and storage demonstration plants, but admitted there was an aspiration for more than one demonstration plant.

He said the winner of the current competition for a CCS demonstration plant would be announced next year as expected and that the government would soon tighten definitions on CCS readiness.

"It is my aspiration to have more than one demonstration project and there will be €9bn (£8bn) available from the EU between 2012 and 2020, some of which will help us [fund new demonstration plants]," he said.

Questioned on the inadequacy of grants through the Warm Front scheme, which aims to provide money to improve the energy efficiency of homes in the UK, Miliband said that grants would be increased and service levels improved before next winter.