Instead the US prefers public backing for research development. It says it has invested some US$30 billion in clean energy technologies.

But a major UN report due on Friday will detail how to fight climate change, and say both tactics are needed.

Steady carbon prices over decades could "largely decarbonise power generation", it says, while adding extra government funding was "also important."

Both Europe and America are keen to nurture clean energy technologies -- so-called cleantech -- which could be worth US$500 billion annually by 2050, according to one UK study.

"We have confidence in our universities, researchers and companies," a European Commission spokeswoman said.

"We are confident that we are on the right track with a balanced mix of policy measures."

The EU argues it could be a waste of money to pay for R&D without a market for the end product. Carbon pricing can create that by penalising carbon-intensive energy sources like coal.

And at least some European businesses back the approach.

"It's impossible to make a difference if governments don't put in place a long-term carbon price," said Vincent de Rivaz, chief executive of French utility EDF.

But European industry is also worried that a high carbon price will push up energy costs and hurt its competitiveness, especially given the bloc has adopted tough unilateral emissions goals.

"It would be a nonsense if Europe got its act together, if that made itself uncompetitive with China, India and the United States," said Miles Templeman, director general of Britain's Institute of Directors.

"That's exactly where we're headed and where we can't be."

PUSH

The UN report pinpoints key unproven technologies needed to make a difference, including burying greenhouse gases underground, using so-called carbon capture and storage (CCS), or a new generation of transport fuels derived from waste.

It's game-changing technologies like these that most need R&D backing in the short-term, it says.

The US Administration has already proposed this year US$2.1 billion in loan guarantees to produce ethanol from the likes of straw and grass, and a further US$1.6 billion in research grants.

Meanwhile, Europe says it will support 10 to 12 CCS demonstration projects, and Britain announces this month the winners for CCS funding which one bidder expects to be worth 600 million pounds (US$1.20 billion).

"Making sure Europe has a slice of the action is vital," said British climate change minister Ian Pearson.

Friday's UN report will echo fears in recent studies by the International Energy Agency and British economist Nicholas Stern that the level of public investment is lagging. It will say research in energy technologies is now half 1980 levels.