European Commission clears Green Investment Bank
The European Commission (EC) has granted permission for the world’s first Green Investment Bank (GIB) to go ahead, after stating that the creation of the bank is in line with EU state aid rules. Approval has been granted for a period of four years.
Established to support environmentally friendly projects that cannot obtain sufficient funding from the markets, the GIB intends to further the UK's 2020 target in reducing carbon emissions and accelerate the development of a ‘green economy’. The Bank is set to begin operations in the next few weeks.
Chairman of the UK GIB, Lord Smith welcomed the EC’s decision, saying: “This is excellent news and a very important milestone as we transition to a low carbon economy and work to boost investment across the industry. We have already made significant progress in building our teams and the necessary infrastructure for the bank and we expect to be fully operational in the next few weeks.
“We clearly have challenges ahead but we have the people, the expertise and the capability to deliver on our priorities and create the foundation for a new climate of green investment."
The EC’s investigation found that GIB's concept ‘foresees several safeguards to avoid the crowding out of private investment’ and ‘preserves a level playing field between competitors in the EU Single Market’.
Those seeking funding from the GIB will be required to provide evidence that shows they have been denied funds or have not obtained all the necessary funding from market operators, in order to qualify for support.
The GIB will also carry an "additionality principle", which states that whenever possible, funding provided by the bank will come in addition to market financing. It is hoped that this principle will allow green projects to flourish while minimising ‘potential distortions of competition’.
Business Secretary Vince Cable said: “This marks an important step. Funded with £3 billion of government money and mobilising additional private capital, the UK Green Investment Bank has the potential to make a significant contribution to the development of a green economy. State aid approval gives the bank the green light to expand investment in the UK’s green infrastructure.”
The EC’s approval outlines that UK GIB can make investments on ‘commercial terms’ in the following sectors:
- Offshore wind
- Waste (treatment and recycling and energy from waste)
- Non domestic energy efficiency
- Biofuels for transport
- Biomass power
- Carbon capture and storage
- Marine energy
- Renewable heat
The official launch of the bank will take place in November, following the appointment of Shaun Kingsbury as its Chief Executive Officer, along with six non-executive directors who are due to meet for the first time on 29 October.
To date, green investments have been made on commercial terms by the Department for Business, Innovation & Skills’ UK Green Investments team (UKGI). UKGI has so far committed £180 million to a range of projects including smaller waste infrastructure, energy from waste, and non-domestic energy efficiency projects. UKGI assets will now transfer to GIB.
Staff from the UKGI team will move into the bank’s new London office later this month, although the GIB headquarters will be based in Edinburgh.