Japan has announced a substantial new subsidy scheme aimed at accelerating corporate adoption of clean energy and boosting regional demand for decarbonised power. Under the plan, the government will allocate 210 billion yen (approximately $1.34 billion) over five years starting in fiscal 2026 to support companies that rely exclusively on clean electricity and contribute to local power generation areas.

Eligible firms — including data centre operators that meet the criteria — will qualify for subsidies covering up to 50 percent of their capital expenditure for investments tied to decarbonised electricity use. The support effort is part of Japan’s broader “Green Transformation (GX) 2040 vision,” a national strategy integrating decarbonisation objectives with industrial policy to spur clean-energy growth and economic expansion.

The initiative is designed to help Japan, one of the world’s top carbon-emitting countries, achieve its clean-energy targets and reduce reliance on imported fossil fuels — a key challenge after setbacks in offshore wind development and stalled large-scale solar projects caused by escalating costs and local resistance.

Under the government plan, renewable energy could account for up to 50 percent of Japan’s electricity mix by fiscal 2040, with nuclear power estimated at 20 percent, up from the 22.9 percent renewables and 8.5 percent nuclear shares recorded in fiscal 2023.

The programme will also promote the creation of designated “GX Strategy Regions,” where local governments and companies will jointly design decarbonisation plans for national selection and targeted support. Application periods for subsidy participation are expected to open next fiscal year.