Japan seeks $11bn green budget funding

The Japanese government is expected to request around a ¥1.6 trillion ($11bn) budget for 2025-26 and the following fiscal years to help drive the country's green transformation (GX) strategy to achieve its net zero emissions goal by 2050.

The GX implementation council led by premier Fumio Kishida on 27 August unveiled its draft budgetary request plan for sectors involved in the GX, which aims at securing at least ¥1.6 trillion, excluding projects whose costs are unspecified. Tokyo is considering seeking ¥1.2 trillion for 2025-26, while asking for the remaining budget to be allocated for 3-5 years. The initial GX-related budget for 2024-25 was around ¥1.7 trillion, including a supplementary budget for the previous fiscal year.

The government plans to allocate ¥255.5bn, or 22pc, of its total budget request for 2025-26, to help set up domestic supply chains to drive its decarbonisation efforts. This includes further development of perovskite solar cells, offshore wind power, storage batteries, water electrolysers and fuel cells.

Japan is anticipated to require more than ¥150 trillion of public-private investment to promote energy transition over 10 years from 2023-24. Tokyo plans to issue around ¥20 trillion of GX economic transition bonds over the decade to support the investment.

Tokyo is now working on formulating the GX vision toward 2040, aiming to complete it by the end of this year. The council on 27 August proposed specific areas to accelerate discussions, including efforts to restart existing nuclear reactors and development of next-generation reactors, as well as renewable energy expansion, LNG and future fuel supply security and industry relocations.

Kishida has promoted nuclear reactors to enhance the country's energy security under his GX strategy, updating the country's nuclear policies since he took office in October 2021. The nuclear-pro GX discussions may influence the continuing review of the country's strategy energy plan (SEP), which was last formulated in 2021 and calls for a reduction of the dependence on nuclear reactors as much as possible. Tokyo should clearly state in its new SEP that it is necessary to not only restart existing nuclear reactors but also build new ones, said Japan's Federation of Electric Power Companies previously.

Kishida has decided to step down from his position as leader of the ruling Liberal Democratic Party next month. But he has emphasised he will make an effort to advance the GX strategy during the rest of his tenure, especially for nuclear restoration in east Japan where no reactors are currently operating. Kishida plans to hold a nuclear-related ministerial meeting next week to work on details of the government support to secure approval by local authorities to restart the 1,356MW Kashiwazaki-Kariwa No.7 reactor. The Kashiwazaki-Kariwa nuclear plant is owned by Tokyo Electric Power (Tepco). It is Tepco's sole nuclear plant, after the Fukushima-Daiichi and its nearby Fukushima-Daini nuclear plants were scrapped in the wake of the country's 2011 nuclear disaster following a devastating earthquake and tsunami.

By Motoko Hasegawa