Awaiting the April 14 completion of a government-led national study on ways to cut carbon emissions while meeting the U.K.’s energy needs, London’s city government has set up a joint-venture firm with the capital’s main electricity utility to develop decentralized, low-emission power and heat projects. Selection of the private-sector partner came within days of a report by an environmental group supporting distributed power over new nuclear investment.

The London Climate Change Agency (LCCA) selected French-owned EdF Energy Ltd. as its joint-venture partner to find opportunities for green energy investments. “We need [EdF] to take forward sustainable energy projects at the scale that will have a major impact in reducing London’s greenhouse gas emissions,” says Allan Jones, LCCA’s chief development officer.

Mayor Ken Livingstone’s office set up LCCA with corporate support last June to design, finance, build and operate low- and zero-carbon power and heat plants. LCCA’s new joint venture will work with the London Development Agency, which controls large tracts of land scheduled for redevelopment.

Livingstone’s energy strategy targets a 20% reduction in carbon dioxide emissions below 1990 levels by 2010. A Greenpeace report last month claimed 17% less emissions from decentralized power generation compared to nuclear. For the U.K., decentralizing power would save over $1.7 billion in nuclear capital investment, not counting cleanup costs, while reducing gas consumption by 14%, it adds. Many expect that the national review will recommend nuclear power construction.

But Vincent de Rivaz, EdF’s chief executive, believes “local solutions” alone are not enough. “A diverse mix of energy is the key to security of supply for the U.K. in the longer term and central to the fight against climate change,” he says. At this stage, EdF cannot forecast how big the new joint venture’s program will be, says a spokesman.