As one of the most vibrant markets last year and with a positive outlook in 2008, the renewable energy sector has been attracting due attention from the business world.

Tory shadow chancellor George Osborne has followed suit and proposed a separate ‘Green Environmental Market' with capital gains tax cuts for listed companies. The proposal is intended to attract further listings and financing for cleantech firms.

M&A recently reported on calls for a separate index on AIM for renewable energy companies. Osborne’s proposal, immediately criticised by the Liberal Democrats, is a step further and would involve the setting up of a separate market to run alongside AIM.

Vincent Davies, the Liberal Democrat deputy leader and shadow chancellor (pictured), told M&A: “I’m very sceptical of the need for special tax incentives for a market that should be functioning on its own merits. However, obviously I encourage  innovative environmental activity and the development of environmental investment funds.

“I was also struck by the fact that the one company highlighted by Osborne as a potential beneficiary is Tesco, which was revealed today as engaging in large scale-tax avoidance activity. Why tax incentives should be given to a tax avoider is beyond me.”

LSE spokesman Patrick Humphries commented to M&A: “AIM already has a strong track record in attracting cleantech companies and tax breaks exist for smaller listed firms. It may be the case that a separate renewable segment or index would serve the sector better. We continually support attracting such firms to the market as there are many expert cleantech advisers and investors based in the City.”