Green bonds offering savers the chance to back the government’s environmental projects are going on sale – but experts think the “paltry” returns on offer will see demand wilt.

The bonds, described as the first ever green savings product issued by a country, go on sale online via the Treasury-backed National Savings & Investments (NS&I) today.

Projects such as zero-emission buses, offshore wind and innovative low-carbon technologies will be backed by the funds raised, the government said.

Chancellor Rishi Sunak said the bonds, launching ahead of the COP26 climate conference, give savers the chance “to put their money to work in the fight against climate change”.

But they pay an annual rate of just 0.65% over a three-year term even though experts said savers could earn a similar return on an easy access account without having to lock their money away.

The Treasury has this month already issued £16bn of green sovereign bonds – which are parcels of government debt – to institutional investors, but the new product is the first of its kind to be available to ordinary savers.

They are being offered for a minimum investment of £100 and a maximum limit of £100,000 per person. The full amount will be held for three years and cannot be withdrawn during that time.

Plans to issue the green savings bonds were first revealed in the chancellor’s March budget.

But experts said the 0.65% rate on offer was a disappointment, with significantly better deals available elsewhere.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “With a rate of just 0.65%, early enthusiasm for the bonds is likely to wither.

“It’s such a disappointment for savers who were hoping for a competitive rate that meant they could do the right thing for the planet and their pocket at the same time.

“Instead NS&I are relying on savers who are willing to pay a price for going green with their savings.”

She said rates of up to 1.8% over three years were available elsewhere while a 0.65% rate could be had on an easy access account.

Laura Suter, head of personal finance at AJ Bell, said: “All that hype for such a paltry rate, is definitely what some savers will be thinking

“Why would savers lock their money away for three years for the same interest rate they can currently get in an easy-access savings account?

“This equation makes even less sense now the nation is looking down the barrel of an interest rate rise from the Bank of England, which will lead to a hike in savings rates.”

The Treasury said research showed appetite among most 25-44 year olds for the concept of such a savings product and that 42% of 18-34 year-olds would be prepared to accept a lower rate of return if they knew their money was being put towards green projects.

It said the government would report regularly so that investors could see which projects have been funded and the positive environmental impact that their investment was making.