Chancellor Alistair Darling has pledged £400m new funding to boost companies involved in clean technology and home owners using renewable energy.
In his Pre-Budget Report today, Darling says he will support £120m of public and private investment in low carbon projects, as well as doubling the commitment to invest in carbon capture and storage.
He also promises to invest £100m in the European Investment Bank's '2020' fund, which will help finance green industries.
Darling also announced a number measures to help households reduce carbon emissions.
Smart-metering will be completed by 2020, and from April, the Government will provide an extra £200m to help another 75,000 houses improve energy efficiency.
In addition, from April, homeowners which have wind turbines or solar panels on properties will receive an average annual payment of £900 from the Government, which he hopes to make tax free.
For businesses using electric cars, the vehicles will be exempt from company car tax for five years.
Richard Gledhill, partner, PricewaterhouseCoopers says countries with a high dependence on coal fired generation will need to accelerate carbon capture if the world wants to stay within 2 degrees of global warming.
"By promising additional demonstration projects in the UK, the Chancellor will be hoping that UK plc can secure its position as a leader in this new sector," he says.
"But the competition internationally is hotting up, particularly from Australia, Canada and the US, so these UK demonstration projects need to move forward quickly."
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