The government's environmental bank is likely to be scaled back to begin life as a fund, jeopardising billions of pounds of badly-needed loans to green technology.
The green investment bank (GIB) was devised by the chancellor, George Osborne, when in opposition as crucial to the development of green energy projects such as clean coal plants and offshore windfarms in the UK.
Now the cabinet minister in charge of seeing the plan come to fruition – a devoted ambassador for the idea of a bank – has floated the possibility of a staggered introduction.
This would see it initially set up as a more limited fund unable to raise finance by issuing "green bonds" to back green projects.
Chris Huhne, the energy and climate change secretary, appears to concede the Treasury's concern that the liabilities taken on by the GIB would be added to the government's budget book.
Tomorrow Chris Huhne will also make an announcement about electricity generation, "On Thursday Huhne will announce other measures which he says will amount to the biggest change to the electricity market since privatisation in the 1980s." The question that needs to be asked is whether Huhne will interfere with the Feed in Tariff incentive for renewable energy which has been very successful since being introduced in April of this year. If Huhne does tinker with the Feed in Tariff financial incentive it may well affect Wrecsam Council's plans to put PV panels on 3000 of its south facing council houses.
Ministers hope to make cleaner ways of generating electricity more competitive, along with measures including a tax on carbon emissions that would make coal and gas plants more expensive to operate.
The Guardian has also learned that Huhne's plan will breach a Conservative pre-election pledge on cleaning up coal plants.
In a speech to environmentalists in October last year, David Cameron repeated his party's pledge to introduce rules requiring new power stations to be as clean as a modern gas plant.
This would have required energy companies to fit experimental equipment which captures and stores carbon emissions (CCS) to about two-thirds of their new coal plants.
But the policies unveiled on Thursday are expected to recommend that CCS is fitted to only a third of coal plants. Huhne declined to comment.