The European Commission has concluded that public funding of 3 billion GBP (around €3.7 billion) granted by the United Kingdom (UK) for the creation of a bank investing in environmentally friendly projects, is in line with EU state aid rules. The Green Investment Bank (GIB) will invest only in projects that could not obtain sufficient funding from the markets. The set-up of the GIB is expected to further the UK’s 2020 target in reducing carbon emissions and accelerate the development of a “green economy”.
The Commission’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. In particular, project holders seeking funding from the GIB will be requested to provide evidence that they have been denied funds or have not obtained all the necessary funding from market operators.
The GIB’s intervention will also rest on a so-called “additionality principle”: whenever possible, funding provided by the GIB will come in addition to market financing. This should allow green projects to materialise while minimising potential distortions of competition.
The Commission concluded that the measure is in line with Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU), which allows to grant aid to support the development of certain economic activities. The approval by the Commission is granted for a period of four years and covers the aid granted to the Green Investment Bank (GIB) itself.
[mappress]
Press release, October 22, 2012