Green Investment Bank cleared by European Commission

The Green Investment Bank being set up by the UK government has been given the green light by the European Commission.

It ruled that the plan to lend for low carbon investment projects did not break Europe's state aid rules.

Permission to use £3bn of government funds has been given for four years but may be withdrawn after that if lending markets open up to low carbon projects.

It is conditional on lending only to projects that cannot find sufficient funding from commercial markets.

The commission in Brussels ruled that the Green Investment Bank concept had safeguards to avoid the crowding out of private investment and preserved a level playing field between competitors.

It also foresees the funding would be part of a partnership with private lenders or investors.

The Green Investment Bank is headquartered in Edinburgh, and is intended to invest in innovative, environmentally-friendly areas for which there is a lack of support from markets.

The initial £3bn fund is to extend from 2015 to borrowing through financial markets.

That includes offshore wind power generation, waste-handling plants, energy efficiency measures, biofuels, biomass, carbon capture and storage, marine energy and renewable heat generation.