Government to sell off shares in Green Investment Bank

The GIB has shown that investment in green technologies can be profitable, and the challenge is now to build on this success, Javid said.

Since it was set up in 2012, GIB has committed £2 billion and helped to finance 50 projects, he said.

"The bank can still be green, still be profitable, still be a market leader in financing environmentally sound infrastructure. But free from limitations on where it can borrow money and EU regulations on state aid, the bank will be able to access a much greater volume of capital," he said.

"This is the right decision for the Green Investment Bank, the right decision for the environment and the right decision for taxpayers," Javid said.

Lord Smith of Kelvin, chair of GIB, said: "In two and a half years of operations GIB has established a successful business model. We have played an important role in strengthening energy supply and security, reducing energy demand and decarbonising our economy. We have achieved all of this by investing profitably."

"Our challenge now is to build a funding strategy which provides us with the capital to match our investment ambitions. The UK government led the world in their vision and commitment in setting up the world’s first dedicated green investment bank, so we are delighted to have their support as we enter a new phase and seek additional investors in our business," he said.

However, Ben Caldecott, an associate fellow at Conservative-backed think-tank Bright Blue and former advisor to the Green Investment Bank Commission, said the part-privatisation was the “last thing we need”.

“The last thing we need is a publicly supported, but privately owned, asset manager using subsidised capital and jobs to compete with the private sector. In contrast a majority publicly owned institution can work in the public interest to catalyse new private investment and be truly additional, by helping the private sector to reduce the cost of capital for important projects that can deal with our national productivity crisis,” he said.

In April, GIB announced plans for a government-backed £200 million international 'green investment pilot programme' that will initially target East Africa, South Africa and India, the first time it had invested outside the UK.

In February, the bank set up a new fund to invest in "innovative" smaller-scale recycling and waste projects.