Serious doubts have arisen over whether the Treasury will allow the Green Investment Bank to begin borrowing money, as scheduled, in 2015/16.
The Department for Business, Investment and Skills, which is driving the setting up of the GIB, has told EaEM that the bank "will be given borrowing powers at this time subject to the targets for reduction in national debt being met and further state aid approval being granted".
The BIS spokesperson added that "GIB borrowing will score against the national debt".
The Aldersgate group, which represents big companies like BT, M&S and Microsoft, has been secretly lobbying for the government to remove this condition, which it says will curtail their ambitions.
She said: "We will need to ensure that the necessary controls are in place so that borrowing is transparent and liabilities can be managed effectively. The decision on the level of borrowing cannot be taken now.
"When considering it in the future, both investment requirements and wider fiscal affordability will be taken into account."
The question is: will the fiscal targets will be met, since the Chancellor George Osborne admitted last Autumn that it would take two years longer to pay off the country's debts than he had originally estimated when he set up the Bank?
The Treasury's target was, before the Autumn Statement, that by 2015-16, public sector net debt as a percentage of GDP must be falling.
The chances of this were then estimated by the independent Office of Budget Responsibility as only "greater than 50%".
Then, the Treasury said that by 2014-15 there would be additional reductions in current spending totals of ￡30 billion a year (these were fixed in the Chancellor's June 2010 Budget).
80% of the further reduction in the deficit at this time was already supposed to come from reductions in public spending.
Autumn StatementBut then came the Autumn Statement, and the OBR revised its fiscal portrait of the UK.
They said Britain has the highest structural budget deficit of any major economy in the world.
They forecast that the current structural deficit will fall from 4.6% of GDP this year to a current structural surplus of 0.5% in five years' time - not three years as previously thought.
The debt-to-GDP ratio – which is forecast to stand at 67% this year – would peak at 78% in 2014-15 and be falling by the end of the Parliament.
As a result, the Chancellor set revised expenditure totals for the two years following the end of the Spending Review period: 2015-16 and 2016-17, i.e., the point at which the Green Investment Bank is supposed to be able to borrow.
He said that Total Managed Expenditure would now fall during that period by 0.9% a year in real terms, but with a baseline that excludes all the additional investments in infrastructure he announced at the time; expenditure which excludes that of the GIB.
The consequence must be that there is now less than a 50% chance of the Treasury's target being met, of public sector net debt as a percentage of GDP falling by 2015-16.
In the same speech George Osborne infamously uttered the words "I am worried about the combined impact of the green policies adopted not just in Britain, but also by the European Union".
To borrow or not to borrow?When the Green Investment Bank was set up, it was strongly advised that it be constituted as a proper bank, and there was even a call to permit anyone to invest in it, with ordinary people being able to buy Green Bonds in order to finance the green industrial revolution.
The Treasury decided this was too risky and unwieldy, and that it could not be seen to borrow more money at a time when the rest of Government borrowing was being cut.
Chris Huhne, the Secretary of State for Energy and Climate Change, fought, and lost, the battle for the Bank to be able to borrow from Day One and therefore to have more funds at its disposal.
Instead, the Treasury set the date at 2015/16, subject to the above target being met, which now seems increasingly unlikely.
￡100 billion by 2020 is a conservative estimate of the cost of the required upgrading of the National Grid, new renewable energy generation like energy-from-waste, the Green Deal, FITs, the Renewable Heat Incentive, ECO, and other measures to decarbonise and future-proof the UK economy and energy sector from the risks of fossil fuel price volatility and climate change.
The Green Investment Bank and the carbon price floor are the Treasury's key means of meeting this bill.
BIS' spokesperson told EaEM that "Our key priority at present is to ensure the establishment of the bank for 2013 and we are on target to achieve this. The GIB is being capitalised to an extent that it will not need to borrow before 2015/16."
The capitalisation is coming partly from the sale of government assets.
￡1 billion stems from standard departmental allocations, and ￡775 million has already been received from the net proceeds from the sale of the high speed rail link.
"The remaining ￡1.225 billion is expected to come from future asset sales," the spokesperson said, adding that "The Chancellor has said if these sales are not completed in time, this sum will be underwritten by the Treasury".
CBI slams Treasury interferenceThe Confederation of British Industry has long called for the Bank to be made effective, and today criticised the way the Green Deal and ECO are being set up, saying the Green Deal won't meet its targets as it is currently designed.
John Cridland, its Director-General, has warned that the Bank "certainly won't work if it needs the Treasury's permission to blow its nose.
"The bank needs to be able to get into the markets itself and do what it's intended to do."
If the date by which the Treasury is to permit it to do this is put off even further this will severely curtail its already reduced effectiveness.
Yet Mr Cridland has said it is crucial that the "Green Investment Bank deliver certainty for investors if it is to generate the scale and pace of investment needed to shift the UK to a low-carbon economy.
"I want it delivering growth - large-scale, mainstream economic growth. I want it delivering the low-carbon infrastructure, leveraging the ￡450bn we need by 2025, that'll bring jobs and opportunities to the UK," Mr Cridland added.
But unless it is released from the Treasury's tether, this can only happen later rather than sooner.