The group is urging Gordon Brown to follow the lead set by US President-elect Barack Obama, who recently outlined plans to invest billion of dollars into creating a clean energy future.
Andy Atkins, executive director of Friends of the Earth, said a "huge investment in clean, green energy is urgently needed".
"The development of a low carbon economy would create exciting new business opportunities and tens of thousands of green-collar jobs - as well as cutting fuel bills and reducing our reliance on the yo-yoing costs and mounting insecurity of fossil fuels such as oil and gas," he added.
Energy watchdog Consumer Focus challenged at least one of the big six UK energy firms earlier this week to "break ranks" and lower prices before Christmas, Marketing Week reported.
Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.