Half of a €1 billion green infrastructure fund to create 13,000 jobs will come from the sale of State shares in AIB, the Labour party has proposed.

It also promises to introduce a scheme to encourage families to cycle rather than use cars to get to school and it will roll out a city cycleway system, starting in Dublin.

The funding will be used as well for “enhanced energy-efficiency projects” including expansion of the Better Energy Warmer Homes scheme to grant-aid the retrofitting of 215,000 homes to improve heating but cut energy costs. The proposal has an estimated €596 million price tag.

It will support clean public transport with plans to replace the bus fleet with cleaner, more cost-effective vehicles, according to Minister for Communications Alex White.

He said €500 million would come from the planned disposal of 25 per cent of the State’s 99.8 per cent share in the bank. This would be matched by private funding.

He said the party's Growing the Green Economy plan would create 13,000 jobs through the retrofit scheme, save €39 million in annual household bills and reduce carbon emissions by 137 kilotonnes.

Minister of State Kevin Humphreys described investment in cycling infrastructure as one of the most intensive job-creation measures.

Cycling investment creates 14.4 jobs for every €1 million spent, compared with 7.4 jobs for the same amount spent on road repairs and upgrades, he said. Labour would spend €10 million on a city cycleway system and invest €1 million in a cycle-to-school scheme.

Mr Humphreys said cycling was much safer now as motorists were much more aware of cyclists. “If we want to tackle obesity in children it is best to cycle to school, to get the habit very early and encourage a lifelong commitment to cycling”.