EU approves UK's £3bn Green Investment Bank
The UK’s £3bn Green Investment Bank (GIB) has today been given the green light by the European Commission, paving the way for a wave of investments in low carbon projects.
Clearance means the bank should be “fully operational in the next few weeks,” according to its chair Lord Smith.
The EU had been reviewing whether the bank breached state aid rules, but found the institution “foresees several safeguards to avoid the crowding out of private investment and preserves a level playing field between competitors in the EU Single Market”.
In particular, projects seeking funding will be asked to provide evidence they have been unable to obtain funds from market operators, and the bank’s “additionality principle” means wherever possible, finance provided will come in addition to market lending.
Business Secretary Vince Cable said state aid approval marked “an important step” towards funding the country’s transition to a low carbon economy.
“Funded with £3bn 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,” he said. “State aid approval gives the Bank the green light to expand investment in the UK’s green infrastructure.”
The GIB was established as a public company and began investing directly in projects earlier this year. Newly appointed chief executive Shaun Kingsbury and six new non-executive directors will take up their positions on the Board on 29 October.
The bank’s remit targets the offshore wind, waste and non-domestic energy efficiency sectors for initial funding.
However, the Edinburgh-headquartered bank will be without full borrowing powers until around 2015, which campaigners have argued will limit its investments.
Last month, the Liberal Democrats adopted a motion to give the Bank full borrowing powers immediately, placing the party in direct opposition to Chancellor George Osborne.
Osborne is today meeting David Cameron, Nick Clegg, and chief secretary to the Treasury Danny Alexander for talks about the UK’s energy investment programme.
Paul Toyne, sustainability director at consultancy WSP, said other hurdles apart from borrowing needed to be overcome.
“We also need to be realistic about what the Bank will be able to fund,” he said. “£3bn is only a fraction of what we need to drive a low carbon economy with the right supporting infrastructure. So there is some expectation management needed - GIB is not the panacea, but it is an excellent step in the right direction.”
Clearance means the bank should be “fully operational in the next few weeks,” according to its chair Lord Smith.
The EU had been reviewing whether the bank breached state aid rules, but found the institution “foresees several safeguards to avoid the crowding out of private investment and preserves a level playing field between competitors in the EU Single Market”.
In particular, projects seeking funding will be asked to provide evidence they have been unable to obtain funds from market operators, and the bank’s “additionality principle” means wherever possible, finance provided will come in addition to market lending.
Business Secretary Vince Cable said state aid approval marked “an important step” towards funding the country’s transition to a low carbon economy.
“Funded with £3bn 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,” he said. “State aid approval gives the Bank the green light to expand investment in the UK’s green infrastructure.”
The GIB was established as a public company and began investing directly in projects earlier this year. Newly appointed chief executive Shaun Kingsbury and six new non-executive directors will take up their positions on the Board on 29 October.
The bank’s remit targets the offshore wind, waste and non-domestic energy efficiency sectors for initial funding.
However, the Edinburgh-headquartered bank will be without full borrowing powers until around 2015, which campaigners have argued will limit its investments.
Last month, the Liberal Democrats adopted a motion to give the Bank full borrowing powers immediately, placing the party in direct opposition to Chancellor George Osborne.
Osborne is today meeting David Cameron, Nick Clegg, and chief secretary to the Treasury Danny Alexander for talks about the UK’s energy investment programme.
Paul Toyne, sustainability director at consultancy WSP, said other hurdles apart from borrowing needed to be overcome.
“We also need to be realistic about what the Bank will be able to fund,” he said. “£3bn is only a fraction of what we need to drive a low carbon economy with the right supporting infrastructure. So there is some expectation management needed - GIB is not the panacea, but it is an excellent step in the right direction.”
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