The plans announced this week aim to reduce carbon emissions by 34 per cent by 2020 and lay out the first investments from the £405 million set aside for low carbon industries in the Budget.

Malcolm Noyle, managing director of Noyle Fleet Solutions, says: ‘In overall terms it is a relief to see that the UK government has at last started to understand the dangers of depending on foreign energy and has developed an innovative plan to invest in the low carbon industry. It is crucial that as low carbon technology emerges UK buyers are incentivised to purchase them.’

Jeremy Leggett, founder of Solarcentury, welcomes the scheme but says incentives for using green energy are still too low – adding that further government incentivisation could create up 100,000 new jobs in the solar power sector.

Tom Delay, chief executive of the Carbon Trust, says: ‘To deliver this project we will need a Herculean effort and sustained political and engineering action. We can boost our economy, create new industries and new jobs, but we must take action now or risk letting this tremendous opportunity slip between our fingers.’

SMEs could benefit from this growing sector, with Business Secretary Peter Mandelson claiming that low carbon and environmental goods and services are set to expand by over four per cent a year up to 2015.

According to government reports, there will be 1.2 million people working in ‘green collar jobs’ by 2020.