The Ministry of the Environment (MOE) will establish in FY2022 a “public-private decarbonization fund” which will invest in private sector global warming measures. The MOE aims to have a total project budget of 100 billion yen, including private funds. The MOE plans to attract private funds by investing in the introduction of solar power generation and the use of wood fuel, with the goal of reducing greenhouse gas emissions to 46% of FY2013 figures by FY2030.
According to estimates by the International Renewable Energy Agency (IRENA), a total of 90 trillion dollars (about 10 quadrillion yen) worldwide and 8 trillion yen a year in Japan will be necessary to reduce greenhouse gas emissions to virtually zero by 2050. At present, domestic investment in decarbonization measures, such as promotion of renewable energy and improvement of energy efficiency, is only about 5 trillion yen.
The Ministry of Economy, Trade and Industry (METI) launched the “Green Innovation Fund” with the third supplementary FY2020 budget. This fund will invest a total of 2 trillion yen over 10 years, but the use of the fund is limited to research and development and dissemination of next-generation decarbonization technologies such as storage batteries and hydrogen. MOE’s goal is to establish a new fund that can supply risk money to private sector projects that use existing technologies to reduce greenhouse gas emissions, with the aim of stimulating private companies’ ESG (environmental, social and corporate governance) investments and loans.
The fund is expected to invest in a wide range of decarbonization projects. The fund will support projects that directly lead to the reduction of greenhouse gas emissions, such as self-sufficient solar power generation that does not use the feed-in tariff (FIT) system, as well as carbon capture and storage (CCS) which collects carbon dioxide (CO2) generated at factories and buries the CO2 underground. The MOE also envisions the fund investing in projects to divert food loss to fertilizers and fuels, as well as forest conservation, wood fuel utilization, and petroleum-derived plastic recycling projects. (Abridged)