The Scottish renewable energy sector will receive $160 million from the British treasury after a longstanding argument about the funds was settled.

British Chancellor of the Exchequer George Osborne announced Friday that a total of $330 million -- which had been frozen in a dispute between the Scottish government and Westminster over the Scottish fossil fuel levy -- have been freed up after a series of negotiations.

Half of the cash will go to fund an array of Scottish alternative energy projects with the other half going to help capitalize a $4.8 billion Green Investment Bank, which would serve all of Britain.

Arguments between Scotland and the British government had been ongoing for five years while the funds, which are essentially a carbon tax levied on utilities burning fossil fuels, have sat unspent in a bank account controlled by the British Office of Gas and Electricity Markets.

Osborne hailed the agreement during an announcement at a former oil fabrication yard near Invergordon, Scotland, as evidence of the British government's support of green energy initiatives, which has been questioned by some in the industry, The Scotsman reported.

"It's great news that we have been able to cut through the arguments and the wrangling with the Scottish government that have stopped this money being invested in the past," the chancellor said. "It shows how serious the U.K. government is in its support for Scotland's green future."

The backdrop of the announcement was the Nigg Energy Park, a one-time oil facility at the mouth of the Cromarty Firth, which is "ideally placed" as a construction site for turbines needed to service two major offshore wind energy developments proposed off the north Highland coastline, the Scottish government says.

The oil industry in the region came to a halt in 2000, when yards at Nigg and nearby Ardersier were shuttered with the loss of 5,000 jobs.

"What this means for the people of Scotland is that $160 million will come out of what effectively has been a frozen bank account and go into green energy and help to create jobs in places like Nigg," Osborne said.

The British treasury chief held the agreement up as an example of how "we can get things done" despite the disagreements between London and Edinburgh over Scotland's constitutional relationship with the British government.

"I am delighted that the U.K. government has at last listened to the Scottish government's case, and accepted the detailed proposal we made to release resources from Scotland's fossil fuel levy so that we can step up investment in Scotland's renewables revolution," added Scottish First Minister Alex Salmond.

The release of the funds may also help Scotland land the new Green Investment Bank headquarters for Edinburgh, local officials said.

"What it enables us to do is to continue the campaign to win the Green Investment Bank for Edinburgh, to present what is already a compelling case for the port of Leith to become the hub of Scotland's and Europe's renewable energy future," Graham Birse, deputy chief executive of Edinburgh Chamber of Commerce, told The Scotsman.