The government has today announced it is to toughen up its draft climate change bill, extending the powers available to the independent Committee on Climate Change and potentially imposing stricter emission reduction targets that include the aviation and shipping industries.

Speaking at the publication of the government's command paper, Taking Forward the UK Climate Change Bill, environment secretary Hilary Benn said that the bill would be "stronger, more effective and more transparent" and argued that the recent consultation period had "helped make a good bill better" .

Under the new proposals, the bill would extend the power and transparency of the independent Committee on Climate Change, giving it the freedom to appoint its own management and staff and requiring it to publish its analysis and advice to government on the setting of five-year carbon budgets.

The government has also responded to criticism from the environmental groups that the bill was too lax and instructed the committee to investigate if the proposed emission reduction targets should be increased from 60 per cent to 80 per cent by 2050 and if emissions from international aviation and shipping should be included.

Furthermore, Benn confirmed the new bill will introduce the government's planned Carbon Reduction Commitment, which will bring large organisations such as supermarkets, hotels and hospitals into a new emissions cap-and-trade scheme.

He added that it will also modify the government's biofuel legislation to help ensure the increased use of biofuels is delivering environmental benefits and provide local authorities with the power to pilot new waste and recycling schemes such as the controversial pay-as-you-throw proposals.

The announcement was broadly welcomed by business groups who argued that the bill will provide firms with the clear legislative framework required to justify investments in low carbon technologies and business models.

Michael Roberts, director of business and environment at the CBI, said that the various changes to the draft bill were "all sensible steps" and welcomed plans for rolling "carbon budgets" that he argued would "provide the right balance of certainty and flexibility".

Craig Bennett of the Corporate Leaders Group on Climate Change also welcomed the proposed changes, claiming that the group's members – which include Tesco, John Lewis, E.ON and ABN Amro - broadly support "bold targets" that are in line with the latest climate change science.

However, he argued that any further amendments to the bill should not hamper plans to get it onto the statute book quickly.

"We want them to get on with this as soon as possible," he said. "The next five years are the most important years in the next 50 when it comes to climate change and we don't want any delays."

Similarly, Tony Juniper of Friends of the Earth argued that plans to investigate changing emission reduction targets were unnecessarily long winded.

"We are pleased the Government is looking again at the overall target for cutting emissions, which it agrees is inadequate, and at whether emissions from shipping and aviation should be included in the bill," he said. "However, it's disappointing that we will have to wait two years for these obvious wrongs to be put right."

Bennett also warned that while the plans for an extension of emissions trading was welcome, the government should not lose sight of alternative means of cutting emissions.

"We see the benefits of emissions trading, but in sectors with relatively low emissions there needs to be an awareness that other forms of regulation can also help cut emissions," he said.

Meanwhile, Peter Madden, chief executive of think tank Forum for the Future, warned that the government would now have to "put its money where its mouth is" if it is to have any chance of meeting its own emissions reduction targets.

"Businesses want a clear steer on where climate change policy is going and this bill will help with that," he said. "But where there are still legitimate questions, where the money is coming from? If you look at the recent spending review, £7bn to £8bn is going on climate change, while £50bn goes on security, £100bn on health and £100bn on education. That's not to say those other areas aren't important, just that the level of investment is not yet there to drive the transition to a low carbon economy."