Leading European industrialists believe the future of manufacturing on the continent will increasingly revolve around green products, often backed by government subsidies.

Although Europe already has a leading position in wind and solar power, thanks to government help, chief executives from across the region have told the Financial Times they expect this to extend into other areas.

Peter Löscher, head of Siemens, Europe's largest engineering group, which is targeting €25bn ($37bn) of green sales by 2011, said: “The green revolution has started and by 2020 green technology will have surpassed the car industry as well as the engineering sector in Germany.”

Carlos Ghosn, head of carmaker Renault, said: “There will be a big role for Europe in technologies where there is a collaborative effort between private sector and governments such as electric cars. Europe will be one of the leaders in this area.”

Green products have a global market potential of €3,200bn by 2020 and Europe could have about a quarter of that, according to a report by Roland Berger, the consultancy.

Many executives say the role of the government will be crucial in determining the pace of growth. A reduction in subsidies by some European governments for solar power last year caused panic in the industry.

Some observers think China will seize a dominant position in renewable energy. But European groups are making increasingly bold commitments. Renault plans to build factories for electric cars and batteries in Europe and Siemens is already making a quarter of its revenues from green products. Air Liquide is working on energy solutions involving hydrogen.