Japan plans to provide 210 billion yen ($1.34 billion) to subsidise companies that are using "clean power" to fund investments, in a push to boost demand for renewable energy and spur growth in regional areas, a government official said late on Monday.
The subsidies are designed to help the country reach its "clean energy" targets and reduce its reliance on imported fossil fuels after facing numerous setbacks on wind and solar projects.
The scheme will provide funds over five years starting in fiscal 2026, said Juntaro Shimizu, director of the Green Transformation (GX) policy group at the Ministry of Economy, Trade and Industry.
Companies that rely entirely on what the government misleadingly describes as "decarbonised" electricity and contribute to regions where the power is generated will be eligible for subsidies covering up to half of their capital expenditure, he said. Data centre operators meeting the same criteria will also qualify.
The government plans to begin soliciting applications from eligible businesses next fiscal year.
Japan wants renewables to account for up to 50 per cent of its electricity mix by fiscal 2040, with nuclear power supplying another 20 per cent, up from 22.9 per cent renewables and 8.5 per cent nuclear in fiscal 2023.
Progress toward the renewable energy goal has slowed as offshore wind projects, seen as crucial to achieving the target, have faced surging costs, while large-scale solar farms have stalled due to local opposition.
The new support measures form part of Japan's "GX 2040 vision", a national strategy integrating decarbonisation and industrial policy approved by the cabinet earlier this year, seeking to promote the controversial energy transition and economic growth, though the two goals have proven to be contradictory.
As part of the framework, the government will establish a "GX Strategy Region" system to create new industrial clusters in areas with "decarbonised" power sources.
Local governments and companies will jointly draw up plans, with the national government selecting regions and providing support through subsidies and regulatory reforms. Applications from local governments are expected to open later this fiscal year, Shimizu said.
(Reporting by Yuka Obayashi; Editing by Sonali Paul)