The government must invest ten times more into green technology than it currently does, according to the Confederation of British Industries(CBI).
Spending on research and development is currently at £250 million, while defence gets £2.6 billion, claims the CBI's latest report.
In order to lead in the low-carbon markets which could be worth $1 trillion (£682 billion), the government needs to increase the level of spending, though business will also have to play an important part.
"It will take a coordinated effort from government and business to ensure the UK is ready to exploit the potential of a low-carbon economy," said Neil Bentley, business environment director at the CBI.
The government has taken the bold step of setting the UK the highest carbon dioxide emission reduction target in the world ? 80 per cent by 2050.
However, meeting that delivery will now require a big effort, and investment, claims the CBI.
Last month prime minister Gordon Brown pledged that the financial downturn would not slow down the desire to achieve green goals.
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