TOKYO, Dec 23, 2025 – Japan is set to provide 210 billion yen ($1.34 billion) in subsidies to companies using clean energy, aiming to accelerate the nation’s renewable energy adoption and stimulate economic growth in regional areas, government officials announced Monday. The funding initiative is part of Japan’s broader efforts to meet its carbon reduction targets and reduce dependence on imported fossil fuels.

The subsidy program, slated to run over five years beginning in fiscal 2026, will cover up to 50% of capital expenditure for companies that rely entirely on decarbonized electricity and contribute to regional development. Data center operators meeting the same criteria will also be eligible. The government plans to begin accepting applications from eligible businesses next fiscal year, according to Juntaro Shimizu, director of the Green Transformation (GX) policy group at the Ministry of Economy, Trade, and Industry.

Goals and Renewable Energy Targets

Japan aims to increase the share of renewables to 50% of its electricity mix by fiscal 2040, while nuclear power is expected to supply an additional 20%. This is a major shift from fiscal 2023, when renewables accounted for 22.9% and nuclear power 8.5% of the nation’s energy mix.

Progress toward these goals has been hampered by setbacks in offshore wind projects due to rising costs, as well as opposition to large-scale solar farms in local communities. The new subsidy measures are part of Japan’s “GX 2040 Vision”, a national strategy integrating decarbonization with industrial policy. The plan, approved by the Cabinet earlier this year, is designed to promote the energy transition while fostering regional economic growth.

GX Strategy Regions

As part of the framework, the government will create GX Strategy Regions, industrial clusters powered by decarbonized energy. Local governments and businesses will collaboratively develop plans, and the national government will select regions for support through subsidies and regulatory reforms. Applications from local governments are expected to open later in the fiscal year.

This initiative highlights Japan’s commitment to combining renewable energy adoption with economic revitalization, particularly in regional areas, while also strengthening energy security and reducing carbon emissions.