Overview of the Green Innovation Fund Projects

In October 2020, Japan declared that it aims to achieve carbon neutrality by 2050, with the goal of reducing overall greenhouse gas emissions to zero by 2050. Carbon neutrality by 2050 cannot be realized through ordinary efforts. It is necessary to significantly accelerate efforts toward structural changes in the energy and industrial sectors, and undertake bold investment for innovation.

METI decided to develop a Green Innovation Fund at the level of 2 trillion yen as part of the New Energy and Industrial Technology Development Organization (NEDO). The plan, based on the specific goals shared by public and private sectors, is to continuously support companies and other organizations for the coming ten years, which show their commitment to challenge such ambitious goals as their business issues ranging from research and development (R&D) to demonstrations to social implementation of the outcomes.

Project Overview

Target Fields and Projects

Among the priority fields on which the Green Growth Strategy stipulates action plans., projects will be implemented that are aimed at realizing ambitious 2030 targets (performance, amount of installation, price, CO2 reduction rate, etc.). At the same time, the government will seek a strong commitment from top management to challenge goals of projects as one of the most critical business management issues.

Target Business Operators

Main implementers should be companies or other profit-making businesses capable of carrying out the entire process of public implementation (participation of small and medium-sized venture companies is encouraged; participation of universities and research institutions is also expected).

Project period

Up to 10 years. Since the main focus is on supporting ambitious efforts requiring continuous, long-term support starting from R&D until demonstrations for public implementation, projects for which short-term government support programs is sufficient are not eligible.

Project Scale

Average size of conventional R&D projects (20 billion yen) or more. Small-scale projects below this funding level may be implemented, however, if a venture company is expected to play an important role in creating a new industry.

Support Scheme

The project must include innovative and fundamental R&D elements that are worthy of being commissioned by the government. Auxiliary projects may also be implemented as part of projects, with subsidy rates based on the content of the subproject.

Basic Policies for Green Innovation Fund

The basic policies stipulate the policies for implementation of the fund project which are commonly applied to the respective R&D fields, including the target companies for support measures under the fund project, the frameworks for maximizing the results of the fund and the system for operating the fund. METI, NEDO and other related organizations will operate the fund project in accordance with the Basic Policies.

The Basic Policies mainly provide two sections: “the target companies for support measures” and “the frameworks for maximizing the results of the fund.” The former explains that the fund should place full emphasis on companies engaging in the fields having high policy effects and requiring long-term, continuous funding support measures focusing on R&D projects, including social implementation, among the priority fields on which the Green Growth Strategy stipulates action plans. The latter presents the following two frameworks for requesting the managers of companies and other organizations to show their commitment to challenge goals as business issues: [i] cancellation of the fund project and partial refund of the commission fees if target companies are not sufficiently committed to efforts and [ii] introduction of incentive measures, e.g., contingent fees, in which the ratio of the national expenditure in total expenditures changes depending on goal achievement levels and other criteria.