Didcot Power Station's iconic chimneys dominate the landscape. As one of the county's biggest polluters, they were a natural target for climate change campaigners, who painted the slogan: "Blair's Legacy" to mark a visit last year by the former Prime Minister.

Now the power station's owners, RWE npower, are at the forefront of a campaign by big business to do 'what it takes' to combat climate change. A new 'carbon-capture' test plant being built at Didcot was pinpointed this week in a high-level national report on how business can combat climate change.

The Confederation of British Industry (CBI) report by 18 chief executives and chairmen of top UK companies pledged that business would play its part in combating climate change - and said it was a golden opportunity to find new profitable eco-friendly products and services.

Some environmental campaigners are sceptical, dismissing companies' efforts to present a greener image as 'greenwash'. Business activities account for about half of all emissions in the UK, and power generation is among the worst offenders.

RWE npower, one of the companies involved in the CBI report, used the launch to reveal details of its ground-breaking plan to 'bolt on' new green technology to coal-fired power stations.

Didcot already has a combustion plant to test the efficiency of different coal. The new test facility will 'capture' the carbon dioxide gas emissions blamed for climate change.

Both npower and its main competitor, Powergen, are considering building new greener coal-fired power stations to plug the gap before renewable options such as wind or wave power - or, more controversially, nuclear power - are ready.

But the carbon-capture technology, which could be commercially available by 2020, will be too late to save Didcot A, one of the most polluting power stations in Britain. It is scheduled to close by 2015.

Any future coal-powered stations are likely to be built on the coast, because carbon-capture needs a large water supply and the waste gas could be buried on the sea bed. A demonstration plant at Tilbury is planned for 2014, using former North Sea oil sites to bury the gas.

Npower is spending £1.7bn on reducing emissions, including £60m to replace Didcot B's two old gas turbines with greener equipment. It has not yet decided what to do with the Didcot A site, which employs the majority of the company's 300-strong Oxfordshire workforce, after 2015.

Analysis developed for the CBI report by consultants McKinsey shows the UK's carbon reduction targets for 2020 are likely to be missed but that 2050 goals, whilst stretching, can be achieved at a manageable cost - provided a greater sense of urgency is now adopted. It identifies priority areas for action to put the UK back on track to meet its targets by 2030.

The report says that firms will have fundamentally to change their business models to meet consumers' and society's needs in an era of climate change. RWE npower chief executive Andrew Duff appreciated the irony of persuading consumers to buy less of his product - energy. But he said business task force pledge to develop new products and services that will "empower households to halve their emissions by 2020" would provide his company with the opportunity to market energy-saving products and services, as well as supplying power.

The Task Force said the longer we wait the higher the cost will be - but that if we act early, the cost for each household can be limited to around £100 a year by 2030.

It stresses that alongside the risks, the shift to a low-carbon economy offered the UK a unique opportunity to develop innovative environmental technologies of the future and prosper in new, multi-billion-dollar world markets - but only if research funding is better co-ordinated and prioritised.

Task Force chairman Ben Verwaayen said: "This is a call to action to the wider business community whose support we need, an offer of partnership with Government, and a commitment to empower consumers. They are key to any solution because of their power to demand environmentally friendly goods, and their influence on government as voters."

CBI regional director Stephen Rankin said: "The challenge of climate change is one every company must take seriously and many key local businesses, including RWE npower, are already well advanced in their efforts to reduce carbon emissions."

CBI Director-General Richard Lambert said: "This is a story of opportunity as well as risk. With the right focus on R&D, we can be at the forefront of new low-carbon technologies that will power the world economy. We don't have to return to the dark ages or live joyless lives to cut our carbon footprints - we just have to learn, together, to do things differently, with carbon becoming a new currency in our economy."

However, environmentalists pointed out that the CBI is still campaigning for the expansion of Heathrow, although Oxford University's Climate Change Unit, recently concluded that it will be impossible to meet the UK's target for a 60 per cent carbon reduction by 2050 without curbing aviation growth. One of the biggest issues concerns car manufacturers - including Cowley car factory owners BMW - who are still lobbying against laws curbing emissions.

Simon Bullock, climate campaigner with Friends of the Earth, said the report marked a big change in the CBI's thinking. He said: "The CBI's position is almost unrecognisable from that of five years ago - tackling climate change is now seen as a major economic opportunity for many businesses with the potential to create many new jobs. Gone is the kneejerk opposition to environmental regulation and taxation, and gone is the assumption that tackling climate change is almost a bigger threat than climate change itself."

But he said the CBI's green agenda was at odds with its lobbying efforts to expand motorways and airports, and opposition to the raising of environmental taxes such as fuel duty and air passenger duty.

He added: "They also call for the Government to set a strong framework of incentives, regulation and tax reform to help business deliver a low-carbon economy. However this new thinking is seriously at odds with the CBI's support for government proposals to overhaul the planning system. The proposed system will force through major carbon-intensive infrastructure projects such as new airports and roads and disempower the public."

Big business may have done a U-turn on climate change, but there are still stormy arguments ahead.