Renewable Energy: £50m plan to boost generation of solar and wind power

Gordon Brown signalled a raft of measures to tackle climate change, which made his 2006 Budget by far the greenest of the 10 he has presented. To many environmentalists, it appeared he was - at last - taking the issue of global warming really seriously.

Mr Brown attacked the problem of cutting emissions of climate-altering greenhouse gases, such as carbon dioxide (CO2), on several fronts at once, looking to start major changes in the way Britain's energy is generated, supplied, consumed, and indeed, thought about. Although he failed in any way to tackle emissions from aircraft, and his tax hike on 4x4s was regarded by many as inadequate, his measures in the energy sector were regarded as genuinely important.

Perhaps the most significant initiative was a £50m for " microgeneration" technologies - making it easier for local communities, firms and even homes to provide their own energy from renewable sources such as solar or wind power, or generating plants.

To a growing number of thinkers and policy-makers, this so-called " decentralisation" of the national energy supply is the way forward in cutting the vast CO2 emissions from traditional coal and oil-fired plants, because giant power stations, supplying several towns, lose up to 70 per cent of the heat energy they generate.

Small local stations, using the technology of combined heat and power (CHP), are able to capture much of the lost energy, and so produce the same amount of electricity for a much lower CO2 output.

Mr Brown said it was "for microgeneration technologies which make it possible for homes and businesses to generate their own renewable energy"

He added: "The purpose of this £50m fund is to show how we can make these technologies, from wind turbines to solar heating, affordable to schools, housing associations, businesses including local authority tenants - initially 25,000 buildings."

Microgeneration has proved its worth in a somewhat unlikely spot - the Surrey commuter town of Woking, where between between 1992 and 2004 the borough council achieved a remarkable 77.4 per cent saving in carbon dioxide emissions. That was thanks to the efforts of a council official, Allan Jones, who succeeded in installing nearly 10 per cent of Britain's solar energy in a town of only 100,000 people. Mr Jones has been "poached" by the Mayor of London, Ken Livingstone, and tasked with doing the same thing for the capital.

Alongside the microgeneration fund, Mr Brown announced several complementary initiatives, including a new energy and environmental research institute, to be created in partnership with major energy companies, while - to help British companies commercialise new environmental technologies - he is creating an enterprise capital fund for the environment, endowed with an initial sum of £20m.

From the consumer side of the equation, he announced another 250,000 more homes would be given help with insulation, and for the business sector he announced the climate change levy, which penalises heavy electricity users but has stayed at the same level since it was introduced five years ago, is (from 2007) to rise in line with inflation.

Finally, Mr Brown announced that, to tackle the crucial issue of future CO2 emissions from developing countries such as China, Britain is to propose a $20bn (£10bn) World Bank fund to help developing economies invest in alternative energy.

Environmentalists reacted favourably. "This may be the first sign we're about to get a Prime Minister who acts on climate change instead of just talking about it," said Stephen Tindale, Executive Director of Greenpeace.

"Many of these measures will make a difference if properly implemented. The measures on energy efficiency and microgeneration are very positive and will help bring forward low-carbon buildings and a decentralised energy system.

"The key decisions on this, however, will be made in the energy review, where the Prime Minister's obsession with all things nuclear still threatens to derail progress towards safer, cleaner and cheaper energy."

Tony Juniper, Director of Friends of the Earth, said: "At long last the Chancellor appears to be waking up to the enormous threat posed by climate change, and is taking some steps to put us in a better position to act.

"However, the measures announced today are insufficient. CO2 emissions have risen under Labour. The Government must set mandatory targets to reduce this each year in line with a clear carbon budget to ensure that its strategy is kept on course."

* Treasury Budget site

* Chancellor's Statement in full