The Budget held out hope for Scotland's energy industry, with a promise to fund cutting-edge "carbon-capture" technology, a huge investment in offshore wind projects and support for energy-efficiency initiatives.

The Budget held out hope for Scotland's energy industry, with a promise to fund cutting-edge "carbon-capture" technology, a huge investment in offshore wind projects and support for energy-efficiency initiatives.

Alongside the conventional Budget, the Chancellor also outlined the first three new carbon budgets, legally required under the Climate Change Act, which will lead to cuts of 34% in the UK's emissions by the end of the next decade.

He said the budgets would "give industry the certainty needed to develop and use low-carbon technology - cutting emissions; creating new businesses and jobs".

In a bid to tackle the emissions from coal and gas-fired plants, the Chancellor said a new funding mechanism would finance between two and four projects which tested the use of technology that captures and stores carbon underground. Previously the government had only planned to fund one project.

ScottishPower has already earmarked Longannet power station on the banks of the Forth as a potential location for a successful carbon-capture installation.

A spokesman said: "ScottishPower is leading the way on the reduction of CO2 emissions through the development of carbon capture and storage CCS technology.

"The UK has a real opportunity to become a global player in the low carbon economy of the future. Our combination of strong offshore and engineering skills and the opportunities offered once again by the natural resource of the North Sea give the UK a unique position in this emerging industry."

National Grid chief executive Steve Holliday said CCS had the potential to massively reduce UK carbon dioxide emissions and maintain secure energy supplies, and welcomed plans to as much as quadruple the scheme.

Mr Holliday said: "The next step for government is to focus on how the carbon dioxide will get from the power stations to offshore storage fields."

Environmental coalition Green Alliance said it was "delighted" with the funding for CCS, which it said was a "vital technology" in the fight against climate change.

Mr Darling announced £405m in new funding to encourage the development of low carbon energy and "advanced green manufacturing" in the UK. There was £435m of extra support to deliver energy efficiency measures in homes, businesses and public buildings, which Mr Darling said would save both carbon and money.

With the credit crunch putting the squeeze on attempts to further develop the UK's offshore wind capacity, the Chancellor said an extra £525m over the next two years would be raised through the Renewables Obligation, which funds clean energy through an industry levy.

However, WWF Scotland's director, Dr Richard Dixon, said the measures did not go far enough. He said: "This Budget was the opportunity to link economic recovery with delivering on commitments to cut our climate pollution by creating many thousands of green jobs.

"Despite some welcome measures, the overall impact on climate emissions and low-carbon jobs will be frustratingly small. This is a particularly disappointing Budget for Scotland on environmental terms.

"More investment in offshore wind is welcome but wave and tidal energy are even more significant for Scotland.

"Wave and tidal technology could create thousands of new jobs in Scotland but the Budget offers no guaranteed money for these technologies. The expansion of the carbon capture and storage competition to up to four sites is encouraging and likely means a bright future for Longannet's bid.

"However, the current progress has been glacially slow and things will need to move much quicker if we are not simply to follow other countries into this technology." Friends of the Earth's executive director Andy Atkins said ministers had squandered a historic opportunity to "kick start a green revolution" which would create tens of thousands of jobs and slash carbon emissions.

He added: "The green sheen on this year's Budget will do little to disguise the fact that yet again the government has merely applied a sticking plaster to a low-carbon industry on life support. The government should be sprinting towards a low carbon future - instead it's limping along."

The New Economics Foundation's policy director Andrew Simms accused the Chancellor of wanting to "have his planet and eat it", by supporting car and oil industries at the same time as making commitments to energy efficiency and low-carbon technology.