Green Investment Bank (GIB) will start lending money to fund low-carbon energy projects from April 2012, a year earlier than initially planned, Deputy Prime Minister Nick Clegg said.
"Possible early priorities for the bank are offshore wind, waste, and non-domestic energy efficiency," Clegg said in a speech to the Climate Change Capital advisory group in London on Monday.
The bank is also set to borrow money from April 2015 onwards, provided that national debt starts falling as a percentage of the Gross Domestic Product (GDP).
Britain needs to invest around £200bn by 2020 in greener technologies so it can meet targets to reduce greenhouse gas emissions by 34 per cent below 1990 levels and generate 15 percent of energy from renewables.
The government has guaranteed 3 billion pounds to fund the startup of the GIB, the world's first national bank dedicated to green project financing, which is seen as a funding tool for the transition to a low-carbon economy.
"There are capital funds that want to invest in the green economy, and firms bursting to grow but desperate for funds. The role of the Green Investment Bank is to close the gap between the two," Clegg said.
The bank will initially make funding decisions under interim arrangements that Business Secretary Vince Cable is expected to announce in more detail shortly.
The first stages of the government's Green Deal, a programme to improve domestic energy efficiency by helping the funding of items such as loft insulation, may also be financed using GIB money.
"The government cannot create a green economy by itself. Only business and investors can do that. We need you to embrace these changes and seize the opportunities they present," Clegg urged investors.
The government estimates the initial 3 billion pounds of investment may raise an additional £15bn in capital.