On October 17, 2012, the United Kingdom received European Commission approval to use £3 billion of UK public funds in setting up the world's first Green Investment Bank, in line with the EU state aid rules. The Green Investment Bank's mission is to invest in projects in innovative, environment-friendly areas to assist in reducing the UK's carbon emissions in line with the UK's 2020 target for carbon reduction by accelerating development of a green economy.
The EU approval paves the way for the Green Investment Bank to invest in projects where there has been a market failure in obtaining funding. The main projects that will benefit will be offshore wind power generation, waste infrastructure, nondomestic energy efficiency, biofuels, biomass, carbon capture and storage, marine energy, and renewable heat generation. The UK Department for Business, Innovation and Skills has said that the Bank will be the first of its kind in the world. It will disburse funds by syndicating and underwriting junior, mezzanine, and senior debt and by taking equity stakes or granting guarantees.
The EU considered the use of public funds acceptable, subject to certain safeguards to preserve a level playing field among funders in the EU single market and to avoid the stifling of private investment. This will be achieved, as the funds will be provided only where those seeking funding can provide evidence that they have been denied funds or have not obtained all the necessary funding from market operators. Wherever possible, the Green Investment Bank's involvement will be provided as a co-investor alongside private funding. The EU approval will be valid for four years.