Councils should give local people greater power to install solar panels and wind turbines to reduce pollution, according to the New Local Government Network.
The think tank argues that people should be given council tax rebates for solar panels and wind turbines and that councils should consult on relaxing the planning regulations for their installation.
Central government could also give local authorities incentives to promote microgeneration as part of the local government grants regime.
Report author James Macgregor said: "Local authorities should be required to demonstrate that microgeneration plans were in the public interest.
"This would require neighbourhood level consultation and debate, giving citizens a powerful voice. Councillors would be at the heart of this process, supported by local officers.
"Listening to the voices of local people in this way would ensure that 'residential amenity' was protected as defined by residents.
"Council tax rebates and capital loans for householders that install domestic microgeneration equipment would incentivise local people to engage in the process.
"This system would empower local citizens and frontline representatives to take ownership of the impact of domestic microgeneration in their neighbourhoods."
