The Paper Federation has issued a cautious response to Prime Minister Tony Blairs Budget-day pledge to invest 100m in renewable energy as part of a wide-ranging commitment to tackling green issues.


"I think the industry has a genuine interest as we regard ourselves as one of the most sustainable," said Paper Federation head of environment David Gillett.


The renewable funds will be used to promote solar power, offshore wind energy crops and other new technologies.


"We clearly endorse any moves towards renewable energy, but we need to be careful as none of these are anywhere near capable of supplying the demand that UK industry actually requires," said Gillett.


Blairs speech also highlighted CHP (combined heat and power). Good-quality CHP and renewable sources of electricity have been made exempt from the Climate Change Levy.


But although CHP was one alternative, said Gillett, it wasnt always seen as renewable energy. The Paper Federation is conducting a study into the better types of CHP plants.


Gillett said: "The sooner alternatives are found to fossil fuels the better. We do not want to see UK forest stocks being used primarily for burning."


Blair plans to meet with leaders from industries such as forestry, water, energy, tourism and finance to try to develop sustainable solutions.


The 100m will mostly come from the Treasurys capital modernisation fund. The DTI will provide around 20m.


Story by Andy Scott