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The Environment Ministry plans to establish a new subsidy system in fiscal 2022 to strengthen support for local governments that are actively taking measures against global warming, such as the promotion of renewable energy use, informed sources said Monday.

For the new subsidy system, the ministry will include ¥20 billion in its fiscal 2022 budget request. The ministry plans to continue to demand funds for the system until fiscal 2030.

The ministry is considering drawing up a new law to introduce the subsidy system.

The subsidy system will be available to local governments that make five-year plans to reduce greenhouse gas emissions to virtually zero by fiscal 2030, according to the sources.

The new system will be designed to encourage local governments to take various measures such as those to utilize renewable energy, equip buildings with heat insulation and energy-saving features and promote the use of electric vehicles.

The system is expected to subsidize 50% to 75% of the costs of target projects. The ministry is also considering further financial support for local governments.

In June, the government decided to designate more than 100 model areas nationwide for efforts to achieve carbon neutrality by fiscal 2030.

Under the new system, subsidies will be distributed to designated ares on a priority basis. In fiscal 2022, between 20 and 40 local governments are expected to receive the subsidies.

The new subsidy system will be created by integrating existing subsidies for local governments, based on requests from the National Governors’ Association and others.

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