Deputy prime minister Nick Clegg has today confirmed the Green Investment Bank will begin lending from as early as next April, as the government seeks to accelerate the flow of investment into low-carbon industries.

Speaking at an event in London hosted by Climate Change Capital, the Lib Dem leader said the Green Investment Bank would operate as the world’s first green development bank, leveraging up to £15bn of private sector investment for low-carbon projects over the next four years.

“The Green Investment Bank will go from an idea to a flow of investment in under two years, and quickly grow into an independent investing, and then borrowing, institution,” he said. “A real legacy of the coalition government’s green commitment.”

The speech came as Sky News reported that Sir Adrian Montague, the former chairman of nuclear operator British Energy and current chairman of private equity group 3i, is poised to accept the job as chairman of the advisory group responsible for setting up the Green Investment Bank.

A spokesman for the Department for Business refused to comment, but details on the make-up of the advisory group and the precise remit of the bank are expected to be announced later this week.

As expected, Clegg confirmed the bank will be backed by an initial £3bn of investment from government, £2bn of which will be raised from asset sales. He reiterated that the institution will not have borrowing powers until April 2015, and then only if “the government target for debt to be falling as a percentage of GDP has been met”.

The move is bound to infuriate green groups that had been calling on the government to reconsider its ban on borrowing, and allow the bank to raise additional funds through borrowing instruments from day one.

However, Clegg stressed that the bank was intended to leverage private finance long into the future, insisting that it would be backed by legislation that ensures “both the operational independence and enduring nature of the bank”.

“We are determined this organisation will be part of the institutional architecture of this country,” he said. “Legislation will ensure a long shelf-life.”

Clegg also stressed that the government was moving quickly to ensure lending begins next year. He hinted that the bank could be used to support the Green Deal building efficiency loan scheme, as requested by numerous green groups.

“Possible early priorities for the bank are offshore wind, waste and non-domestic energy efficiency,” he said. “We are also looking at the potential for using the bank to help deliver the first stages of the Green Deal. In the initial period, investment decisions will be made under interim governance arrangements, which Vince Cable will set out in more detail shortly.”

The precise remit of the bank has reportedly been the subject of disagreements between the Business Department (BIS) and the Department of Energy and Climate Change (DECC). DECC has allegedly pushed for the bank be used to fund emerging technologies such as marine energy, while BIS has argued initial funding should be focused on more established low-carbon technologies.

Both BIS and the Cabinet Office refused to be drawn on the precise remit of the new bank, but a spokesman revealed that the interim governance arrangements will be announced “very, very soon”. According to rumours, further details on the bank could be confirmed as early as tomorrow.

Clegg acknowledged that, for many green campaigners, the Green Bank proposals will “not be enough”. While he acknowledged that it is the job of environmental NGOs to lobby for more ambitious policies, he also urged campaigners to recognise the progress the government is now making.

He also called on investors to take advantage of the certainty provided by the new carbon budgets, Green Investment Bank, and Green Deal scheme to increase funding for low-carbon projects.

“The government cannot create a green economy by itself,” he said. “Only business and investors can do that. We need you to embrace these changes and seize the opportunities they present.”

James Cameron, vice chairman of environmental investment manager and advisory group Climate Change Capital, called the Bank’s creation “a major step forward”, but warned momentum had to be maintained to attract long-term investment into the UK.

“The fact that the Coalition will legislate to create an enduring and operationally independent UK Green Investment Bank with the power to borrow is decisive,” he added. “It will guarantee that the GIB can play a key role in delivering Britain’s low carbon transformation over the long term, while operational independence from Ministers and civil servants can ensure effectiveness and build confidence with private sector partners. There was a risk that the GIB’s initial capitalisation could be spread too thinly at the beginning, but this is being addressed.”

The announcement was similarly welcomed by green groups, although they too voiced concerns about the precise details of the bank’s remit and the financial products it will be allowed to offer. Responding to the further announcement today about the structure of the Green Investment Bank, Greenpeace Executive Director John Sauven said:

“We welcome Nick Clegg’s announcement that the Bank will be enshrined in legislation and be independent,” said Greenpeace executive director John Sauven. “A strong, independent Bank is crucial if the UK is able to compete seriously in the rapidly growing £3.2 trillion global market for low carbon goods and services. But it will be hamstrung from the outset by keeping the restriction on borrowing powers until at least 2015. Britain’s ability to attract new industries and create new jobs could still be derailed by Treasury accounting rules.”

Friends of the Earth’s senior economy campaigner Simon Bullock also warned that there was “still room for dinosaur forces in the Treasury to hamper the Bank’s effectiveness”. “The Government needs to say legislation will happen next year at the latest, and make clear the Bank can borrow from the capital markets from the outset,” he added.

By James Murray