I have managed to find out a bit more about why this is failing.
It seems that when trying to create a new environment using "initenv", I add the project name and then the database string and it states that the "The current storage engine is MyISAM. It must be InnoDB"
I have created a new database for trac in my existing MySQL installation and all tables in this database are InnoDB type. How would I make sure that trac-admin detects these tables as InnoDB?
I'm not sure how changing the default_storage_engine global variable will affect the rest of the databases which contain mostly MyISAM tables so I am worried about changing this setting. Is there a way to stop Trac from detecting the storage engine?