Chancellor Rishi Sunak announced the new savings product in today’s Budget.

Billed as the “world’s first sovereign green savings account”, the bond will be offered through the government-backed savings organisation NS&I and linked to the UK’s inaugural green gilt.

Interest rates for the account have not yet been announced, but the funds raised will be used to fund projects on renewable energy and ‘clean’ transportation.

The bond will be available later this year.

Sunak said: “The UK is a global leader on tackling climate change, with a clear target to reach net-zero by 2050 and a Ten Point Plan to create green jobs as we transition to a greener future. ‘In a world-first, we’re launching a new green savings bond which will give people across the UK the opportunity to contribute to the collective effort to tackle climate change.”

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “The new ‘green bonds’ from NS&I were rumoured to be in the works running up to the Budget announcement and are designed to raise funds for ‘green’ projects as a collective effort to tackle climate change in the run up the net-zero target of 2050. NS&I is a trusted brand so it would not be too surprising to see a large uptake in these bonds in the summer, especially as interest rates sit at record lows and savers consider other ways to invest their cash.

“There are already some ‘green bond’ alternatives for savers to consider, including deals from Gatehouse Bank and other savings vehicles with ethical providers including Charity Bank, Ecology Building Society, Tandem Bank and Triodos Bank.”