Australia's Clean Energy Finance Corporation has launched its first investment, committing to a joint $100 million energy efficiency loan program with the Commonwealth Bank.
The deal sets up a stand-off with the Coalition which has vowed not to honour any contracts signed by the $10 billion corporation if it wins office later in the year.
The corporation's chief executive, Oliver Yates, said on Friday it would co-finance loans for medium-sized businesses for energy efficiency projects such as energy saving lighting, solar panels, and cogeneration and trigeneration plants.
The CEFC and the Commonwealth Bank will each chip in $50 million to the program, which will hand out loans between $500,000 to $5 million.
It builds on an existing scheme put in place by another government agency, Low Carbon Australia - now folded into the CEFC - which has so far delivered $10.2 million to projects in manufacturing firms.
The CEFC is also working on a number of other larger deals, and it is understood some could be introduced as early as next week.
It is reportedly negotiating to help New Zealand company Meridian Energy increase its debt in the massive Victorian Macarthur wind farm with a $100 million-plus loan, before it sells its share in the project.
The Coalition has vowed to axe the CEFC, along with the carbon price.
It has also written to the corporation saying any contracts it signs will not be honoured by the Coalition if it forms government.
Opposition climate action spokesman Greg Hunt said: ''Our position has been that we will not claw back funds advanced before the writs are issued [for the election], but we will not advance any further funds if we form government''.
The CEFC could face other funding pressures.
Prime Minister Kevin Rudd has mooted moving quicker to an emissions trading scheme from the carbon tax,
This would dramatically reduce the revenue the scheme brings in.
The corporation is currently slated to get $2 billion in annual carbon price revenue for five years, which could come under pressure under any earlier move to a trading scheme.
It comes as prominent Australians have signed an open letter to the head of Australia's big four banks calling on them to divest in fossil fuel projects to ensure global warming is not pushed past safe levels.
Signatories to the letter - which will run in newspapers on Saturday - included authors Peter Carey, Kate Grenville and J.M. Coetzee, musicians Mark Seymour and Paul Dempsey, ethicist Peter Singer, and Australian climate commissioner Professor Lesley Hughes.
The group asks the banks to place an immediate prohibition on loans for new fossil fuel projects and associated infrastructure, and for them to sell down stakes in coal and gas companies.