Details of one of the government’s flagship green initiatives are likely to be left out of Wednesday’s comprehensive spending review, as ministers cannot agree on the policy.

The green investment bank was championed by George Osborne, chancellor, while in opposition. He set up a commission to report on how such a bank would operate.

However, the proposed bank has been mired in disagreements over how it should be funded and the powers it should have.

On Wednesday, Mr Osborne is likely to announce that the bank – or corporation as it may be called – will be set up with £2bn in funding, to be spent on green infrastructure projects such as renewable energy and other forms of low-carbon technology.

That sum is less than the £4bn to £6bn funding many companies and green groups have demanded.

More controversial than the funding, however, is the role that the bank should play. The commission set up by Mr Osborne, and led by Bob Wigley, the former European head of Merrill Lynch, called for the bank to have powers to raise finance from the private sector, for instance by issuing bonds, green Isas, raising loans and other measures.

However, Treasury officials have been wary of granting a government-backed institution such wide-ranging powers. They would prefer the bank to operate as a simpler fund, dispensing grants and loans in conjunction with the private sector but without the powers to generate its own self-sustaining financing mechanisms.

A final decision on the way the bank should operate is not likely to be reached by Wednesday, when the comprehensive spending review is published. Instead, the government is likely to say that details will be laid out within a few weeks.

During that time, many businesses are likely to lobby officials to grant the green investment bank the powers that were originally envisaged, arguing that a simple fund would not be able to leverage the private sector financing necessary to create the infrastructure needed.

The idea of a green investment bank was received warmly by companies involved in building the UK’s low-carbon infrastructure.

Last month a group of more than 20 companies wrote to ministers to call for the bank to be given £4bn to £6bn initial funding for the next four years, and wide-ranging authority to issue structured financial products.

The group included Jaguar Land Rover, Microsoft, BT, PepsiCo and British Airways, as well as financial institutions such as Bank of America Merrill Lynch, Axa Investment Managers, F&C Investments and the British Private Equity and Venture Capital Association.

John Sauven, executive director of Greenpeace, said: “The renewables industry could provide tens of thousands of jobs. But without the right government backing in the form of an independent green bank, we’re going to miss this opportunity.”

The future of other government-funded bodies that dispense funds to green industry, such as the Carbon Trust, which is charged with helping companies to reduce their emissions, is also under review.

Some of the bodies could be merged, or their funding could be redirected to the green investment bank.

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