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4.63. The main policy development during the review period included the adoption, in October 2021, of the sixth Strategic Energy Plan (SEP), replacing the 2018 SEP.[30] The main objectives of the 2021 SEP include to show the path of energy policy towards the realization of "2050 Carbon Neutral" announced in October 2020 and the new greenhouse gas emission reduction targets announced in April 2021 (to cut greenhouse gas emissions by 50%). It also aims to secure a stable supply and reduce energy costs on the premise of ensuring safety in order to overcome the challenges faced by Japan's energy supply and demand structure while promoting climate change countermeasures, confirming the basic principles of Japan's energy policy (energy security, economic efficiency, environment sustainability, and safety (3E+S)).
[30] Agency for Natural Resources and Energy, Strategic Energy Plan, October 2021. Viewed at: https://www.enecho.meti.go.jp/category/others/basic_plan/pdf/strategic_energy_plan.pdf.
[31] NEDO, Green Innovation Fund. Viewed at: https://www.nedo.go.jp/activities/green-innovation.html; and METI. Viewed at: https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/basicpolicies_211213.pdf.

4.64. The 2021 SEP[the sixth Strategic Energy Plan] indicates that the Government will make efforts towards decarbonizing innovations through the Green Innovation Fund for the enhancement of competitiveness in Japan's industries. JPY 2 trillion has been entrusted to the New Energy and Industry Technology Development Organization (NEDO) for the use of the Government. (...)The 2021 SEP states that, towards 2030, the Government needs to mobilize all policies in order to further pursue the major principles of 3E+S[energy security, economic efficiency, environment sustainability, and safety], which has been the major premise of energy policy (i.e. ensuring a stable and cost-effective energy supply and addressing the issue of climate change, on the premise of ensuring safety). (...)

4.65. Where carbon dioxide emissions are technically unavoidable, the 2021 SEP[the sixth Strategic Energy Plan] states that the Government will utilize negative emission technologies including Direct Air Carbon Capture and Storage, Bio-Energy with Carbon Capture and Storage, and forest sink measures.

4.66. (...)The 2022 amendment to the Act on Rationalizing Energy Use (Energy Conservation Act), which is to be implemented in April 2023, expands the scope of "energy" within the meaning of the Act from fossil energies to all types of energy.[32] This is intended to allow the Act and its relevant regulations to address the rational use of all types of energy, including renewable and non-fossil. The 2022 amendment to the Act also requires that businesses increase the proportion of non-fossil energies used in their operations. To this effect, certain businesses meeting the scale threshold must submit to the METI[the Ministry of Economy, Trade and Industry] a mid- to long-term plan regarding their future transition from fossil to non-fossil energies and periodical reports on the latest usage of non-fossil energies.
[32] METI, Outline of the Draft Amendment to the Energy Conservation Act, etc. Viewed at: https://www.meti.go.jp/press/2021/03/20220301002/20220301002.html.

4.67. Moreover, the 2022 amendment[the 2022 amendment to the Act on Rationalizing Energy Use (Energy Conservation Act)] clarifies that relevant legislation includes hydrogen and ammonia as sources of non-fossil energies. It also stipulates that the Japan Organization for Metals and Energy Security (JOGMEC) can provide private equity infusion and loan guarantees for private projects relating to production and storage of hydrogen and ammonia.

4.69. According to Japan's latest notification to the Committee on Subsidies and Countervailing Measures, during the review period, several schemes provided grants for demonstration projects for high-efficiency gas turbine technology; projects and activities by NEDO[the New Energy and Industrial Technology Development Organization]; and promotion of energy saving by homes and businesses.

4.72. The 2021 SEP[the sixth Strategic Energy Plan] states that while coal, among fossil fuels, emits the largest amount of greenhouse gases based on the current technologies and relevant institutional frameworks, it remains a significant energy source for its stable supply and affordability. It explains that the Government will commit to decreasing the share of coal in the power generation remix, while relying on it until Japan's shift to renewable energy sources is completed and to the extent that the reduction of coal does not hinder Japan from securing a steady supply of energy.

4.73. To reduce the proportion of coal, the SEP[the sixth Strategic Energy Plan] states that the Government intends to implement various measures. For example, the Government will aim to encourage more efficient generation of coal-fired thermal power by setting new targets benchmarked to generation efficiencies. With respect to the capacity market, starting in the FY2025 auction, the Government will steadily promote the fade-out of inefficient coal-fired power by reducing the amounts that inefficient coal-fired power generation operations receive from the capacity market. Moreover, the Government intends to promote the development of technologies such as Integrated Coal Gasification Combined Cycle and Integrated Coal Gasification Fuel Cell Combined Cycle, both of which are next-generation, high-efficiency coal-fired power generation technologies.

4.80. (...) the SEP[the sixth Strategic Energy Plan] (...)also states that natural gas plays a central role as a power source that supplements renewable energy, while emitting the least amount of greenhouse gases among fossil fuels. (...)

4.84. With regard to the pricing and support scheme, in April 2022, the Act on Special Measures Concerning Promotion of Use of Renewable Energy Electricity (a revision of the Act on Special Measures Concerning Procurement of Renewable Energy Electricity by Electricity Utilities) entered into force.[46] The new Act introduced a feed-in premium (FIP) system, with a view to encouraging renewable energy producers' independence from the feed-in tariff (FIT) system while securing the investment incentives. Whereas the FIT system guarantees qualified producers that the generated renewable energy be purchased at fixed prices over the long term, the FIP system offers market-driven purchase prices that are composed of a fixed premium (subsidy) and market prices. The Government describes the FIP system as a transition measure until the renewable energy sector can be placed under the same competition environment with other energy sectors. (...)
[46] METI, Information Relating to the Act on Special Measures Concerning Promotion of Use of Renewable Energy Electricity. Viewed at: https://www.enecho.meti.go.jp/category/saving_and_new/saiene/kaitori/FIP_index.html#fip_seido.