The former head of BP, who now heads the European operations of a US private equity house, warned carbon pricing is coming and will impose costs on conventional energy sources.

"Businesses should start planning for this eventuality today and not tomorrow," he told an audience at the Leeds University Business School.

"The challenge is to reduce emissions. The key is to replace high carbon operations with low carbon operations. Every business needs to make and implement an efficiency plan covering all of its operations." The high-profile businessman added, though, that the emergence of carbon pricing is as much an opportunity as it is a threat.

Carbon will become a core economic concern for all businesses in the coming years and increasingly management performance will be judged on this basis, he said.

The peer said he believed the world is going through a period of dramatic change, characterised by uncertainty and complexity. He said fuel is now three times as expensive as in the first half of the decade with downward and upward pressure causing volatility in oil prices, alth-ough he did predict a peak in oil demand before a peak in supply.

Lord Browne noted the growing concern about energy security, fuelled by the increasing concentration of oil and gas supplies in a small group of nations.

The sovereign wealth funds of resource-rich nations – with a combined value of £3 trillion – are assuming "a very important role" in the global financial system, he said, while calling for constructive engagement with the owners of these mega-powerful vehicles.

He forecast that the world's energy mix would become more diverse in the future and said energy efficiency would become central, which would be a "triple win" as it would lower costs, reduce emissions and enhance energy security.

"The potential remains to be realised; the greater challenge is changing consumer behaviour," he added, suggesting more regulations and public education are needed. He pointed out that last year £150bn was invested in alternative and renewable energy sources which would help reduce expenses for business.

Lord Browne predicted policies and politics are likely to become more important in energy supply. He said the current global situation needs a system of government and political leadership that transcends day-to-day electoral and short-term politics.

While chief executive, Lord Browne helped BP deliver record profits and was one of the best paid businessmen in Britain. He stepped down last year following a legal tussle with a national newspaper.

He was speaking in Leeds on Thursday evening as part of the Corporate Wisdom series of lectures, organised by the business school and Whitehead Mann, the executive search company.