As Japan's nuclear crisis unfolds, energy and environmental experts said that investor confidence in the technology was already beginning to wane, with renewable energy and fossil fuels the likely beneficiaries.

"Shares in renewable energy industries yesterday rose while most other energy stocks fell," said Clare Brook, fund manager of leading green investment group, WHEB, in London. "This tragedy comes on top of the oil price rise, the BP disaster in the Gulf of Mexico and unrest in the Middle East, all of which has made renewables more attractive. We would expect investment in renewables, especially solar, to increase. Nuclear has become politically unacceptable," she said.

Rupesh Madlani, a renewables analyst at Barclays Capital in London agreed. "At the very least, we would expect significant investments in nuclear power to be delayed, or deferred, for one to two years."

But some leading environmentalists who have backed the technology as a low-carbon alternative to fossil fuels said the accident should not slow new nuclear investment.

The climate scientist James Lovelock said the problems in Japan should not put people off nuclear power. "There is a monstrous myth about nuclear power. I would make a strong guess that of the tens of thousands of people killed in Japan, none of them will be from nuclear power."

He said that people were "prejudiced" against nuclear power unreasonably. "It is very safe," he said. Chernobyl, for instance, was "an idiotic mess-up that could only have occurred in the Soviet Union", and according to UN estimates had killed only about 56 people. More people are routinely killed in oil refineries and coal mines, he pointed out.

He added that the reactors affected in Japan were among the oldest still operating, and that newer plants had more safety features.

Mark Lynas, another environmental campaigner who has espoused nuclear power as a way to limit climate change, was also strongly supportive of the technology, but pessimistic about how it would be perceived after the Japanese experience.

"It's too early to make a final diagnosis of what is happening in Japan, but what is obvious is that this will be a colossal setback for the nuclear industry at just the moment at which climate change is sparking a real renaissance," he said.

While he said there was unlikely to be serious damage resulting from the problems at nuclear power stations in Japan, he said the public perception of events was likely to taint the reputation of nuclear power.

He said the events in Japan were "extremely bad" for nuclear energy, even though Japan had little opportunity to generate more energy from renewable sources, because of a lack of land for wind power and a lack of sun to generate solar energy.

"It's about public acceptability," he said. "If people do not think nuclear power is acceptable, then the most likely outcome is a return to fossil fuels."

But Benny Peiser, director of climate sceptic group Global Warming Policy Foundation, doubted that the accident would benefit renewables. "Japan's nuclear disaster will only intensify the global race for cheap fossil fuels while most future energy research and development will go into nuclear safety," he said.

The Green MP Caroline Lucas said the Japanese accident strengthened the case against new nuclear construction. "You will never be able to completely design out human error, design failure or natural disaster," said Lucas, whose party backs energy efficiency and more renewable energy to meet Britain's energy and climate change goals.

Walt Patterson, associate fellow at Chatham House thinktank, said that the financial damage could also be severe. "Somebody is going to wind up paying the bill and it will probably be the Japanese public one way or another," he said. "That is undoubtedly going to filter back to the debate in Europe as a further factor in the very dubious economics of these plants," he told Reuters.

European governments yesterday scrambled to step up efforts to assess nuclear safety. Germany is to take seven of its 17 nuclear reactors offline for three months while the country reconsiders plans to extend the life of its atomic power plants. Switzerland has said that it will impose a moratorium on three new plants and Finland will review the safety of its nuclear reactors.

On Tuesday, a meeting of EU energy ministers, nuclear regulators and industry officials agreed in principle to a series of "stress tests" for European nuclear power stations.

"I think it will make a lot of governments, authorities and other planners think twice about planning power stations in seismic areas," said Jan Haverkamp, European Union policy campaigner for environmental group Greenpeace, which opposes new nuclear reactors and wants existing ones phased out.

Other analysts said they expected confidence in nuclear power to drop significantly as it did in the aftermath of other major accidents. Political confidence took at least three years to recover after the partial core meltdown in Unit 2 of the Three Mile Island accident in 1979. According to the International Atomic Energy Agency, the accident slowed growth, but led to a large number of new safety measures.

But any renewed confidence was shattered six years later in April 1986 after the Chernobyl accident – the most devastating in the history of nuclear power. World leaders categorically declared their continued intention to rely on the source of energy within weeks of the catastrophe, but funding for nuclear energy research dried up, the public became hostile and financiers in the US and Europe shunned the industry.

No new reactors were ordered in the US for 25 years while Germany, Italy and many other European countries banned the expansion of the energy source.