Report: Green Revolution is already here

Investment in the low carbon economy is booming but it may not be enough to avoid a global economic recession without major government reforms, according to a major new report released yesterday by US-based research firm the Worldwatch Institute.

The State of the World 2008 report claims that green businesses are attracting higher levels of capital than ever before, with an estimated $66bn invested in the renewable energy sector alone last year.

"Environmental problems are drastically rewriting the rules for business, investors, and consumers, affecting over $100 billion in annual capital flows," said project co-directors Gary Gardner and Thomas Prugh.

The report claimed that the past few years have seen a major u-turn in businesses' attitude to the environment with even carbon intensive companies such as Dow Chemical and General Motors urging US Congress to pass new greenhouse gas legislation. Meanwhile, the financial community has rushed into the green business space with 575 environment and energy-related hedge funds introduced in the past few years as investors seek to cash in on the cleantech boom and the burgeoning carbon market.

However, the report warned that without major government reforms designed to accelerate the shift from fossil fuels to cleaner energy forms the market led efforts to curb climate change were likely to prove insufficient. It warned that without greater action from governments economic damage from climate change could account for eight per cent of global economic output by the end of this century.