Manchester's economy could lose £21bn over the next twelve years if it fails to retool its workforce to take advantage of the impending shift to a low carbon economy, according to a new report, labelled a "Mini Stern" assessment of the likely impact of climate change on the city.

Speaking to BusinessGreen.com, Rashid Bashir, author of the Deloitte report which set out to analyse how the city could take advantage of the shift to a low carbon economy, said there is potential for the area to become the "silicon valley" of the new sustainable economy.

"By 2030 the sustainable economy will be thriving," he said. "If the area doesn't create the right conditions for small businesses to thrive, then they will move elsewhere."

By creating the right conditions for new and emerging businesses the area would have a chance to become a global focus for investment, he added.

The report argued that as well as fostering conditions for innovative businesses, the city must work to ensure the impact of new environmental legislation is as small as possible on the rest of the economy.

Climate change legislation is set to tax high energy industries such as manufacturing and transport most heavily, but will also affect other businesses as customer focus on companies' environmental credentials grows and businesses look to take advantage of emissions trading schemes, it predicted.

The city would do well to focus attention on its relatively low carbon financial and professional services sector, as well as leading the drive to green procurement and sourcing through the public sector which accounts for a quarter of the city's workforce, the report advised.

The region should also be aware of the economic risks associated with the airline industry being included in the EU Emissions Trading Scheme (ETS), according to Bashir.

"The aviation industry is one of the key drivers for the region," he said. " If it is restricted without careful consideration of how the economy can adapt the affect could be disastrous."

As well as fostering conditions for businesses to take advantage of eco-innovation opportunities and encouraging businesses to reduce their emissions, the report recommended that Manchester put in place a scheme to re-skill the workforce, establish targets for renewable energy use in local areas, and invest in the transport infrastructure to improve its efficiency.