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THE European Commission has granted approval to the UK government to set up a green investment bank to invest in low carbon infrastructure projects.

The Commission assessed the bank, which was set up as a public company earlier this year, under state aid rules. It concluded that it has sufficient safeguards to prevent competitors being crowded out of the market, for example, companies requesting funds from the bank will have to provide evidence that they could not obtain sufficient funding from market sources. The approval lasts for four years.

The bank will invest in low carbon projects designed to boost the UK’s green economy. Priority sectors covered by the Commission’s approval include offshore wind, waste and non-domestic energy efficiency, but will also include energy from biomass, biofuels and CCS.

The seven-strong board, including CEO Shaun Kingsbury, will first take up their positions on 29 October, with the bank officially launched at the end of November. Chair Lord Robert Smith said that he expects the bank to be fully operational within weeks.

“This marks an important step. 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. State aid approval gives the bank the green light to expand investment in the UK’s green infrastructure,” says UK business secretary Vince Cable.

The bank will be based in Edinburgh, also with a London office. It will have full borrowing powers from 2015.