The Department for the Environment, Food & Rural Affairs (DEFRA) said it was also encouraged by Shotton Papers commitment to the project. WRAP planned to give 23m of aid for development of the UPM-Kymmene-owned plant.

"We are disappointed that the European Commission feels there may be a case for state aid review," said a DEFRA spokesman.

"We believe it is a legitimate use of funding and will push the Commission for a favourable decision. If intervention by ministers will be helpful we will do so."

A report in the next few weeks will invite comments from third parties.