As I noted when the climate change negotiations kicked off in Copenhagen on Monday, one of the key requirements is to ensure there will be markets for clean technologies, providing industry with the confidence to invest in product development.

After two days of heavy negotiations at an EU summit in Brussels, the European Union has agreed to make Euro 7.2 billion available over the next three years to help developing nations take measures to reduce greenhouse gas emissions and deal with the effects of climate change.

The deal was announced this afternoon by Fredrik Reinfeldt, Sweden’s Prime Minister, who said all 27 members of the EU will contribute to the fund. The UK is putting in Euro 1.78 billion.

Down the line this will boost markets for clean technologies. More immediately, those gathered in Copenhagen hope it will be a spur for international agreement on cutting greenhouse gas emissions. European Commission President Jose Manuel Barroso said he was confident the EU funding pledge would oil the wheels for the second week of negotiations.

The contribution promised by the European Union represents a fair chunk of the $30 billion over three years that is being proposed as the total global fund.

The EU has also made announcements of some big spending on European clean energy projects this week, with grants of Euro 1 billion for six carbon capture and storage projects and Euro 565 million to nine offshore wind energy projects.

Promoting carbon capture and storage is a recognition that we are not going to close down the coal-fired power stations anytime soon, while the wind energy projects will drive the development of an integrated offshore wind industry.

The EU offers a double-stranded justification for this expenditure, that on the one hand clean tech investments have a direct economic stimulus in terms of job creation and enhancing energy security, and on the other that it paves the way to a low carbon future.