Japan Sets Up Clean Energy Fund to Revitalize Regional Economies

Japan’s Ministry of the Environment set up a fund to invest in clean energy projects to support regional companies and reduce carbon dioxide emissions.

The ministry has set aside 1.4 billion yen ($14 million) for the fund for fiscal 2013, said Kazuhiro Okuma, an official in charge of the fund. The fund will invest in projects with private investors for as much as a half of equity.

“We want to support projects that are led by regional companies and financial institutions,” Okuma said at a briefing in Tokyo today. “It’s important to create a model for sustainable society by promoting low carbon projects and revitalizing local communities at the same time.”

The move came a year after Japan introduced an incentive program for clean energy. The program has boosted solar capacity more than any other renewable source. Solar is faster to build than other types such as geothermal or wind, both of which must be assessed for their environmental impact.

“There are many large-scale solar projects by big companies but not much else is really increasing,” Okuma said. For renewable projects that require a lot of initial investment, regional companies tend to lack capital and local lenders do not have much experience in project financing, he said.

Green Finance Organization will manage the fund and pick about five to 10 projects for the year through March 31, according to Yoshihiro Toyofuku, the organization’s secretary-general.

To contact the reporter on this story: Chisaki Watanabe in Tokyo at cwatanabe5@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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