The Government of Japan allocates funds for climate and energy in its annual budget. Since FY2023, Japan has conducted investments to promote what is referred to as the Green Transformation (GX).
In the interest of clarifying the overall picture of the government’s climate and energy budgets, this report analyzes the size of those budgets in FY2024 and FY2025 as well as allocations, by ministry and by budget category. It then summarizes the status of achievement for budget plans and category-by-category allocations for GX investments.
Key takeaways:
FY2024 and FY2025 Climate and Energy Budget
- Of the government’s FY2025 budget, the total climate and energy budget was 4.7 trillion yen (3.6% of the total budget), an increase of 313.5 billion yen from FY2024. Of this amount, the GX budget accounted for 1.5 trillion yen, or 32% of the climate and energy budget, a decrease from FY2024.
- By ministry, the Ministry of Economy, Trade and Industry (METI) accounted for more than 70% of the total budget for both FY2024 and FY2025, while the Ministry of the Environment (MOE) and the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) each accounted for about 10%.
- By category, fossil fuels (including hydrogen and ammonia) increased from FY2024, accounting for 38% of the total. Energy efficiency accounts for 32 % of the total. On the other hand, the budget for renewables is very small, at only about 4% of the total. In the energy efficiency category, a large budget is allocated to housing/buildings, IT, and automotive. Budgets for fossil fuels and nuclear power increased from FY2024, while battery storage decreased.
GX Budget from FY2023 to FY2025
- Compared to the amount of public and private investment over the next 10 years, the current amount of government investment in renewables is very small, while large amounts are being invested in battery storage and nuclear power.
- The GX budget share was high for the categories of battery storage, automotive and IT in FY2025. The share for fossil fuels and nuclear power increased sharply compared to FY2024, while the share for battery storage decreased significantly.
GX Economy Transition Bonds
- The government plans to issue 20 trillion yen in GX Economy Transition Bonds over 10 years to fund projects under the GX budget. The first issuance of Climate Transition Bonds (GX Economy Transition Bonds issued as individual issuance) in FY2023 totaled about 1.6 trillion yen, followed by the second issuance in FY2024, totaling about 1.4 trillion yen. The plan for FY2025 is about 1.2 trillion yen. The annual issuance amount has been decreasing year by year.
