"The clean energy industry is maturing and its backers remain bullish," said Achim Steiner, head of UNEP. "These findings should empower governments – both North and South – to reach a deep and meaningful new agreement by the crucial climate convention meeting in Copenhagen in late 2009. Environmental change scenarios are indeed now driving public policy, including the energy mix."

At $50.2 bn, wind energy attracted the lion’s share of the 2007 investment. And solar power is growing fast, at an average annual rate of 254% since 2004. In total the year saw 31 GW of sustainable generation capacity installed, around 23% of all new power capacity worldwide and roughly 10  times that of nuclear power.

The total sustainable energy transaction volume for 2007 was $204.9 billion, made up of $98.2 bn for new renewable energy generation, especially wind in the US, China and Spain, $50.1 bn for technology development and manufacturing scale-up, and $56.6 bn that changed hands through mergers and acquisitions.

While activity in 2007 boomed, the first quarter of 2008 was subdued, in line with the global credit crunch. The US ethanol industry underwent restructuring and several substantial wind developers sold their portfolios. According to the report, many realised that with the tightening up of the credit markets they could not finance growth themselves. But most areas of investment rebounded in the second quarter of 2008 "even as global financial markets remained in turmoil".

So which region is the biggest player? Europe has continued to lead in clean energy investment, and the US is in second place. China, India and Brazil are the fastest growing clean energy markets. They saw new investment of $26 bn in 2007, a 22% share of the total and up from the 2004 figure of $1.8 bn, a 12% share.

Wherever they are, companies and markets would benefit from a clear direction on national and international carbon regulation policy.

"With world temperatures and fossil fuel prices climbing higher, it is increasingly obvious to the public and investors alike that the transition to a low-carbon society is both a global imperative and an inevitability," said Steiner. "This is attracting an enormous inflow of capital, talent and technology. But it is only inevitable if creative market mechanisms and public policy continue to evolve to liberate rather than frustrate this clean energy dawn. What is unfolding is nothing less than a fundamental transformation of the world’s energy infrastructure."

On the research side, 2007 saw a total investment of $16.9 bn in clean energy and energy efficiency R&D. Of that amount $9.8 bn was from corporates and $7.1 bn from governments. Europe and the Middle East led corporate R&D activity, followed by the Americas and then Asia. On the government side, however, Asia – mainly Japan, China and India – took the top spot for R&D spend.

Even investment in energy efficiency technology, which is often seen as unglamorous despite its often almost immediate money-saving potential, reached a record $1.8 bn in 2007, up 78% from 2006. North America led the field in energy efficiency spending, despite the fact that its energy legislation lags behind Europe, says the report. According to the International Energy Agency, each dollar invested in energy efficiency on average avoids more than two dollars that would otherwise be needed to create new supply.

The last word goes to Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change (UNFCCC):

"According to the IEA, a massive amount of $20 trillion is projected to be invested to meet the world’s energy demand in 2030," he said. "If these investments are not made in a climate-friendly way, emissions of greenhouse gases might go up 50% in 2050, while science tells us they need to be cut by 50% in 2050. I hear businesses crying out for clear policy signals to make the right investment decisions today. Setting a long-term target for 2050 is useful, but I think it would give investors much more clarity if rich countries would indicate where they want to be in 2020 or 2030."

It’s not just environmental campaigners hoping that governments will find a robust replacement to the Kyoto protocol – big business would like to know the roadmap too.