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Alistair Darling has described green technology as "one of the great growth sectors" in the world economy.
As part of Wednesday's financial announcement, the chancellor presented the "world's first ever carbon budget".
Darling's Budget committed Britain to cutting carbon emissions by 34 per cent by 2020.
And he stressed that using low carbon technologies would be key to developing the green industry, cutting emissions and creating new business and jobs.
"They are a landmark step, which point the way to the vital decisions which must be made at the Copenhagen Climate Change Summit later this year," he said.
"Climate change is one of the biggest challenges our world faces – and Britain is setting the lead.
"We are ahead of every other major developed country in progress against our Kyoto targets," he added.
Offshore wind power generation was also given a funding boost by Darling's Budget.
He pledged £525m over two years for offshore wind farms, funded through the renewables obligation.
He described the potential of this environmentally-friendly technology as "enormous".
Darling also announced £405m of new funding to encourage low carbon energy and advanced green manufacturing in Britain, intended "to drive the application of new technology and invest in small scale projects".
He also called for Britain to become a "world leader" in research and technology of renewable energy, stating: "We need to support all forms of renewable energy."
"To encourage the use of Combined Heat and Power technology, I will exempt those projects from the Climate Change Levy from 2013 – bringing forward over £2.5bn in investment.
"I am determined that we will replicate this success across the renewable energy and low carbon sectors.
"This will help protect our planet and secure the country’s economic future," he argued.
The government already published on Monday a plan to promote and invest in fast-growing companies, in an effort to help markets work more effectively.
The new industrial framework is intended to "remove the barriers holding back innovation", Darling said.
To support the strategy, the chancellor announced the creation of a new £750m Strategic Investment Fund.
The fund will provide financial support, focusing on emerging technologies and regionally important sectors, such as biotechnology.
"It will encourage exports, support inward investment, promote research and development and harness commercially our world-class science base," Darling said.
He also used the Budget to announce that renewables and other energy projects in the UK stand to benefit from up to £4bn of new capital from the European Investment Bank.
Stakeholder Response: Campaign to Protect Rural England
Ben Stafford Head of Campaigns at CPRE said: "We welcome the £535m to support offshore wind, although how much of a boost this figure will give to the industry remains to be seen. Overall, the government will have to come up with more ambitious proposals if it is to meet even the 34 per cent cut in greenhouse gas emissions by 2020 set in its carbon budgets.
"And we hope that the £90m allocated for preparatory studies on carbon capture and storage will be well spent; coal-fired power generation without CCS should be an environmental no-no."
Stakeholder Response: Woodland Trust
Lee Bruce of the Woodland Trust told ePolitix.com:
"From the environmental viewpoint it is welcome that the Chancellor of the Exchequer reiterated the government's climate change objectives by committing to a 34 per cent cut in carbon emissions by 2020. The ring fencing of a further £520m of new support for off-shore wind farms and £435m for energy saving measures is also a helpful step in the right direction.
"However the main budget report causes the Trust concern. Defra's funding will be clipped by £381m , including an additional £75m on top of the savings outlined in the pre-Budget report. Whilst the precise implication of these plans remains unclear, there is a marked risk that Defra and its agencies could be starved of the funding needed to protect the natural environment. There is also the possibility of Defra being further marginalised at a time when the department should be an integral component in the government machinery.
"Finally, the economic crisis should not hide the perilous position our natural environment is in: government concede that it will fail to meet their target to halt wildlife loss by 2010. Environmental decline is a genuine concern because the natural world provides a range of invaluable ecosystem services including improved air and water quality and green spaces for relaxation, reflection and recreation. One of our most valuable assets, ancient woodland, predates this crisis but the demands for infrastructure development continue to put pressure on this habitat. Let us hope that actions to restore confidence in the economy do not come at the expense of ancient woodland and the wider environment."
Stakeholder Response: NESTA
NESTA's chief executive, Jonathan Kestenbaum said: "Today the government took a vital step on the road to recovery and the future looks a lot brighter for the UK's entrepreneurs. The Fund will give a new vibrancy to the UK's technology market and will bring about deep and lasting change to our economy.
"As the fund gets designed, it's vitally important that a proportion is allocated to high-potential early stage technology businesses. Innovative new firms are central to the UK's future economic prosperity.
"Recessions are times to take bold action. I am pleased that the government has acted on our recommendations to invest in the UK's growth sectors to unlock future growth. The £750million investment fund will be critical in sustaining the UK's global position in these sectors."
Stakeholder Response: Association for Consultancy and Engineering
ACE chief executive Nelson Ogunshakin said: "It is clear that sustainability is near the top of Mr Darling's list of priorities and that's a good sign, but we need to see how these plans will be implemented before we can judge their effect on our industry and the wider economy.
"The government needs to be much clearer about its intentions. When it says investment in combined heat and power will be brought forward, the industry needs to know where from. With the funding measures to build more homes, spending £400 million on unlocking thousands of dormant sites, how will that unfold? We appreciate that such measures are in the pipeline but our industry needs increased investment now, not later, if we are to tackle the severe challenges facing us in a recession."
"The mooted additional efficiencies in procurement must be worked through systematically. How are we going to achieve these efficiencies? ACE supports the concept of getting better value for money but the chancellor's plans have to be delivered quickly and without compromising quality of delivery.
"ACE looks forward to meeting with the relevant government departments to discuss the more specific points of this Budget and how the consultancy and engineering sector can help them to target their investment wisely, with prudence and for the benefit of the UK economy as well as our industry."
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