* Huhne denies lying to police about 2003 speeding offence
* Scandal hurts Lib Dems, satisfies some Conservatives
* Fellow Lib Dem Davey replaces Huhne in coalition cabinet
* Green campaigners fear weakening of environmental policies (Adds Ed Davey to replace Huhne, comment, quotes)
By Estelle Shirbon
LONDON, Feb 3 (Reuters) - British Energy Secretary Chris Huhne resigned on Friday after learning he would face criminal charges for allegedly lying to police, a fall from grace that could tweak the dynamics of the coalition government and weaken its environmental agenda.
The scandal is an embarrassment to Huhne's centre-left Liberal Democrats and could strengthen the hand of their senior coalition partners, the right-wing Conservatives, in the field of energy policy.
"To avoid any distraction to either my official duties or my trial defence, I am standing down and resigning as energy and climate change secretary," Huhne said in a short statement less than an hour after the decision to charge him was made public.
A heavyweight among Liberal Democrats and a fearless critic of some Conservative colleagues, Huhne was replaced by lesser-known fellow party member Ed Davey, who was previously a junior employment minister.
Huhne's troubles stem from an allegation that after committing a speeding offence in 2003 in Essex, east of London, he asked his then wife Vicky Pryce to take the blame so he would not lose his driving licence.
Huhne and Pryce face charges of perverting the course of justice. They will make their first court appearance on Feb. 16.
"Chris Huhne's successor faces huge challenges ... and needs to get a grip on a complicated brief very quickly," said Jim Skea, research director at the UK Energy Research Centre.
Clean energy and environmental groups expressed concern that Huhne's resignation, at a time when the government has new policies in the pipeline, would stall reform and cause uncertainty.
"Huhne had been a staunch defender of the green agenda at a time when other coalition leaders seem to be distancing themselves from it," said David Symons, director at global environmental consultancy WSP Environment & Energy.
"TORIES HATED HUHNE"
Huhne was working on a scheme to boost private sector investment in green energy, electricity market reform, and an appeal against a court decision that a controversial cut in subsidies to the solar energy sector was unlawful, among other issues.
Tim Montgomerie, an influential Conservative commentator, said his departure would please senior Conservative ministers.
"(Conservative finance minister) George Osborne will certainly see the change as an opportunity to kick some green policies into the longer grass," Montgomerie wrote in his widely-read ConservativeHome blog.
"Tories (Conservatives) hated Huhne and cabinet might now be a happier place," he added.
In his response to Huhne's resignation letter, Prime Minister David Cameron told him he had made the right decision, thanked him for his role in negotiating the coalition agreement and said he could be "justly proud" of his record in government.
"You played a key role in securing the progress made at the Cancun and Durban summits (on climate change), and I pay tribute to the leadership you showed at both," Cameron wrote.
Huhne was credited with helping hammer out an international agreement on cutting greenhouse gas emissions at last December's United Nations climate change talks in Durban.
The Liberal Democrats have had a bumpy ride since they formed the coalition with the Conservatives in May 2010. Their popularity has plummeted on widespread perception they abandoned several key campaign pledges such as one to scrap tuition fees for students. Instead fees have been increased.
Huhne's resignation follows that of David Laws, one of the Liberal Democrats' leading lights, who quit over an expenses scandal in 2010 after just 17 days as chief secretary to the Treasury. He was replaced by Danny Alexander, another Lib Dem.
The party is assured of five senior cabinet posts under the coalition agreement. (Additional reporting by Stephen Addison, Michael Holden and Nina Chestney; Editing by Sophie Hares)