Germany, China and Japan present some of the lowest risks for green investors and clean tech firms looking to expand their operations, while the UK and US currently have a higher risk policy and investment environment, according to a major new study from Deutsche Bank.

The wide ranging report, titled Global Climate Change Policy Tracker: An Investor's
Assessment, analysed low carbon policies in 109 countries and ranked them based on the risks they presented clean tech investors.

Of the countries in the Major Economies Forum, Australia, Brazil, China, France, Germany and Japan were deemed to present the lowest risks. Germany and China also ranked highly in terms of the amount of money invested in low carbon projects between 2000 and 2008, with respectively $36.7 billion and $41.2 billion in capital investment

Ranked by investment risks, the UK and US occupied the second tier of countries, alongside Canada, India, Indonesia, Mexico, Russia, South Africa and South Korea. However, both the UK and US boasted relatively high levels of green capital investment between 2000 and 2008 with $17. billion and $52.1 billion invested respectively.

Italy took the wooden spoon, designated as the major economy with the highest level of risk for clean tech investors.

Kevin Parker, global head of asset manager at the bank said the "Climate Tracker" represented a world first and would become a valuable tool for green investors and clean tech firms. "We believe that as a comprehensive exercise at both a policy and country level, this is the only publicly available study of its kind," he said.

Overall, the report found that governments need to strengthen underlying renewable energy mandates and clean tech incentives immediately if they wish to attract sufficient capital to green industries.

It also warned that even if current and proposed policies were to make their maximum possible impact, concentrations of carbon dioxide in the atmosphere would still exceed 450 ppm by 2020, making it all but impossible avoid average global temperature rises of 2 degrees Centigrade.

The report added that many countries – including the US and the UK – still do not have the transparency, longevity and certainty of policy that investors require to make significant long term outlays in renewable energy industries.

However, it argued that it was still possible to stabilise concentrations of atmosperic greenhouse gases at under 450ppm if governments "deliver strong deal at Copenhagen, but most importantly, strong follow-through at a sector and industry policy level to create transparency, longevity and certainty".

The report recommended feed-in tariffs, such as those pioneered in Germany, as the most effective means of guaranteeing long term returns for investors and giving them the confidence to fund capital intensive projects.

It also called for new policies to tackle the high upfront costs associated with improving energy efficiency and recommended reforms to emission cap-and-trade schemes to ensure greater stability in carbon prices.

It noted that carbon markets such as the EU emissions trading scheme, though effective in providing long term policy certainty can lead to high levels of price volatility that discourage low carbon investments. It recommended that government's address such volatility by axing free allocation of carbon credits in favour of auctioning, and then ringfencing the proceeds to fund green incentive schemes – providing an extra "carrot" to go with the "stick" of a carbon price.

The report comes as US energy secretary Steven Chu warned yesterday that his country may miss out on a multi-billion dollar market in clean energy technologies unless it acts quickly to spur investment. The USA's share of global solar cell production has fallen from 40 per cent in the mid 1990s to seven per cent last year, he said, adding that the emergence of China and the EU as rival clean tech hubs could undermine long-term US competitiveness.