Japan: a 2 trillion yen Green Innovation Fund for climate neutrality technologies

Japan launched the Green Innovation Fund — a fund with an initial value of 2 trillion yen, which is to support the development of technologies needed to achieve climate neutrality by 2050. According to CSIRO HyResource, METI created it after the October 2020 declaration of the aim of carbon neutrality by 2050 — the fund was established in a supplementary budget and its management was entrusted to NEDO (New Energy and Industrial Technology Development Organization).

The role of hydrogen

Hydrogen is one of the fund's key areas. According to the IEA policy database, amounts were set aside within the Green Innovation Fund for hydrogen projects: up to 300 billion yen for developing a large hydrogen supply chain and creating demand (transport and liquefaction technologies and a demonstration of hydrogen combustion), up to 70 billion yen for producing hydrogen by water electrolysis from renewable energy (besides production technologies, technology demonstration was also included) and up to 193.5 billion yen for possibilities of using hydrogen in iron and steel making. These are maximum allocations for the individual areas, not amounts spent. The sum of the three hydrogen items listed by the IEA is 563.5 billion yen, or about 28% of the fund's initial value — a substantial part of a fund that also covers other technologies needed for climate neutrality, not only hydrogen; the money comes from the supplementary budget, and the fund's operator is NEDO.

What about renewable gases

The fund is not a programme dedicated to biogas, but it affects the market indirectly: it supports supply chains for hydrogen and energy carriers such as ammonia. Japanese gas companies are also developing e-methane (synthetic methane from hydrogen and CO₂), which we discuss in a separate article. The risk for dispersed biogas plants is that public money goes rather to large hydrogen and ammonia projects than to small installations.

The instrument

The IEA classifies the programme as grants for research, development and innovation (R&D), in force since 2021, with national scope.

What next

The scale of the fund shows that Japan is betting on breakthrough technologies and large supply chains rather than on the gradual deployment of solutions that are already mature.