Sure, a green loan guarantee spurs investment in that area but the business model must still be sound or it will be falter in the marketplace. And if government steps in and, say, also guarantees an energy price, that's just another form of taxation for the consumers that must pay the costs of a political choice in energy. This will quickly hit a wall of resistance from consumers if that particular technology is a mallinvestment.
Furthermore, the loan guarantees themselves might not be officially counted in the debt to GDP ratio, but rational investors will be aware of them and price government bonds accordingly. A state that over-guarantees bad loans will see trouble servicing their debt in the marketplace, and at least in Europe the well known structural fragility of the Eurozone will amplify those shocks and bring them into the foreground.