The association says investment in the sector has dropped by 95 percent in the last year, blaming it on low UK power prices, high gas prices and NETA which penalises small generators, like many small CHP plants, which cannot guarantee their output.

UK power prices have dropped 25 percent after NETA came into force in 2001 and boosted competition.

The government wants to encourage CHP technology which is more environmentally friendly and produces less pollution than coal, oil and traditional gas-fired plants as part of a scheme to cut greenhouse gas emissions.

Under the global Kyoto protocol, Britain aims to cut greenhouse gas emissions by 12.5 percent on 1990 levels by 2010 and has set a domestic target of 23 percent for the same period.

To reach the goals the government wants to double the installation of CHP, which harnesses excess heat from electricity generation instead of wasting it, to 10,000 megawatt by 2010 compared with 5,000 MW in 1997.

But a Department of Trade and Industry report in July showed companies only built 38 MW of new capacity in 2001 compared with 844 MW in 2000 and a government goal of 600 MW each year.

The government also faces a struggle with another strand in its environment policy aimed at raising green power output to 10 percent of Britain's power needs from 2.8 percent at present.

"Now, more than ever, we need to ensure that we realise all the benefits CHP has to offer if we are to meet our climate change commitments," Beckett said.

But the Director of the CHP Association, David Green said he was disappointed Beckett had not presented an action plan to support the sector.

"We wish there had been specific measures announced today which would have given the industry confidence that the government is going to deliver on its CHP targets," he told Reuters on the sidelines of the conference.