The Japanese government plans to set up a JPY20tr (USD155bn) fund to boost investment in new power grid technology, energy-saving homes, and other technologies that can decrease the country’s carbon footprint, as reported by Nikkei Asia on May 14. Specifically, smart grids which can adjust the flow of electricity to match demand will be one priority of the fund. The fund will also help carbon-intensive businesses like chemical plants and steel mills shift to cleaner processes, and support the establishment of supply chains for fossil fuel alternatives like hydrogen and ammonia. The government will elaborate the proposals involved in the fund in a New Capitalism policy framework due to be finalized in June.
Japan’s Ministry of Economy, Trade, and Industry (METI) estimated that Japan needs to spend a total of JPY150tr (USD1.2tr) in decarbonization over the next decade to achieve its carbon neutrality target for 2050. Before that, the country aims for a 46% reduction in carbon emissions by 2030 compared to 2013 levels. According to METI, the public and private sectors will need to shell out around JPY17tr (USD131.7bn) on decarbonization measures in 2030 alone to realize the 46% emission cut, compared to the current investment of about JPY4.8tr (USD12.9bn) for decarbonization. In addition to the government-led fund, the Bank of Japan (BOJ) [8301:JP] also distributed zero-interest loans worth USD17.94bn to financial institutions in its first round of allocation in December 2021, in a move to promote green and sustainable loans to help industry sectors transit to net-zero emissions.