WIREDGOV

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.

Background

The GIB's objective is to reduce carbon emissions in the UK by accelerating the development of a "green economy". The GIB's mission is to invest in projects in innovative, environmentally friendly areas for which a market failure has been identified, such as offshore wind power generation, waste infrastructures, non-domestic energy efficiency, biofuels, biomass, carbon capture and storage, marine energy and renewable heat generation. It will be capitalised with 3 billion GBP and will intervene by syndicating and underwriting junior, mezzanine and senior debt, by taking equity stakes or granting guarantees.

Given that the market and, in particular, the scope of these market failures could still evolve in the future, the Commission has granted the approval for a period of four years.

The approval holds for the aid granted by the United Kingdom to the GIB itself. Interventions by the GIB in support of undertakings will have to be notified to the Commission and assessed under EU State aid rules, unless a private player operating under market conditions would have accepted to invest on similar terms (following the so-called "market economy investor principle").

The non-confidential version of the present decision will be made available under case number SA.33894 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Contacts :

Antoine Colombani (+32 2 297 45 13)

Maria Madrid Pina (+32 2 295 45 30)