The Green Investment Bank was approved by the European Commission today.
The bank is now set to begin operations in the next few weeks.
State aid approval gives the GIB the ability to make investments on commercial terms, across a wide range of green economy sectors.
Business Secretary Vince Cable said: “This marks an important step. Funded with £3 billion 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.”
The GIB was established as a public company earlier this year.
Following approval from the European Commission, final preparations are now in hand for the UK GIB to begin making investments.
Shaun Kingsbury, the bank’s CEO, and six new non-executive directors will take up their positions on the Board on 29 October.
The official launch of UK GIB will be at the end of November.