Money invested in the bonds will be used to help finance green and sustainable projects selected by the government.

The bonds will be available from today and will be on sale for 3 months.

NS&I says that among the green projects the bond will help fund are greener transport, switching from fossil fuels to renewable energy, preventing pollution, using energy more efficiently, protecting natural resources and adapting to a changing climate. 

Initial reaction from some industry experts has so far been cool with some criticising the rate offered as too low.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “NS&I Green Bonds are unlikely to be picked by enormous numbers of savers at this rate, because with a return of just 0.65%, early enthusiasm for the bonds is likely to wither.

She said better rates were available elsewhere but added: “However, given that it’s an NS&I product, so is 100% backed by the Treasury, and is a brand that savers know and trust, there will be some interest regardless. And given the bonds’ green credentials, some savers will decide it’s worth paying the price for supporting environmental projects.”

The Green Savings Bonds were announced by the Chancellor in his Spring Budget and are available online from NS&I.

The minimum investment is £100 with a maximum of £100,000 per person and investors need to be aged 16 or over to purchase the new bonds. Customers must also have a UK bank account capable of receiving BACS payments.

The full amount deposited must be held for three years and cannot be withdrawn during this time although there is a ‘cooling off’ period for the first 30 days.

The fixed rate is guaranteed for the whole term with interest earned daily and added once a year on the investment's anniversary and paid on maturity. 

Interest will count towards the customer’s Personal Savings Allowance and needs to be declared by the individual.

Chancellor Rishi Sunak said: “Our world-first Green Savings Bonds give savers across the UK the chance to back the Government’s green projects and put their money to work in the fight against climate change. 

“The UK is already a world leader in green finance and these innovative new savings bonds will deliver both financial returns and environmental benefits, in a transparent and secure way.”

Ian Ackerley, NS&I chief executive, said: “Green Savings Bonds will offer savers the chance to contribute towards the UK’s green agenda and support six key areas to help make our environment greener, cleaner and more sustainable."