It is hoped the Joint European Support for Sustainable Investment in City Areas fund (JESSICA) will also create more than 1,000 jobs and promote sustainable and carbon economic growth.
A decentralised energy structure will mean heat and electricity are produced much more efficiently by locating it closer to the consumer. Investment into the waste infrastructure will increase recycling capacity and energy from waste facilities.
A proposal to build a decentralised energy network in Barking is one of the first projects under consideration to receive support.
Mayor of London Boris Johnson said: This funding is hugely important to London. It will provide a major jobs boost to some of Europes most deprived areas and play a major role in the capitals work to tackle climate change, helping to stimulate a low carbon economy.
I am pleased that the European Commission recognises that while London is a major world city and leading financial centre, parts of the capital face real hardship.
The fund, which will be managed by the European Investment Bank, is made up of £50 million from the European Regional Development Fund, £32 million from the London Development Agency and £18 million from the London Waste and Recycling Board. The LDA has been working with these groups to ensure that London becomes the first part of the UK to benefit from the scheme.
Through the JESSICA model, returns generated from the invested funds can be reused for new investments.
European commissioner for regional policy Pawel Samecki said: The JESSICA Fund will make a significant contribution to sustainable regeneration and improved quality of life in the most deprived areas of London. Unlike a one-off grant, this fund can be recycled and re-invested, which means the money goes further and delivers better long-term results.