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The central government is considering setting up a new grant system to support local governments working aggressively to reduce greenhouse gas emissions.

The state hopes that the system will help local governments realize targets under a regional decarbonization road map that was adopted this month so that Japan can attain carbon neutrality by 2050, informed sources said.

The Environment Ministry is set to include the costs for the new grant system in its planned budget request for fiscal 2022.

In order to reduce greenhouse gas emissions and achieve carbon neutrality, it is necessary to take various measures over long periods of time, including a shift toward renewables, improvements in the energy efficiency of buildings and increased usage of electric vehicles.

Many local governments are calling for new grants for such measures, as grants can be used more flexibly than subsidies, according to the sources.

The central government is considering providing the envisioned grants to 100 or more model areas that will be decided based on a road map to realize carbon neutrality there by fiscal 2030, the sources said.

Another idea is to include high-priority measures in the road map, including solar panel installation at homes, to the list of items eligible for the grants even if the measures are taken outside the model areas, the sources added.

The government is considering using its special budget account for energy to finance the new grant system. Full details, including costs to be requested, will be decided before the budget request is made in summer.

In the road map, the central government promised to set up a program to provide comprehensive assistance continuously to local governments over multiple fiscal years to help them realize carbon neutrality.

Such assistance was also mentioned in the central government’s annual economic and fiscal policy guidelines adopted at a meeting of the Council on Economic and Fiscal Policy on Friday.

Other major economies have also announced massive decarbonization measures.

The European Union is set to invest ¥70 trillion over seven years under its green recovery plan that aims to boost an economy hurt by the coronavirus pandemic and step up its fight against global warming.

The United States plans to invest ¥100 trillion over five years mainly to build renewable energy-related infrastructure.

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