JAPAN Law and Practice Contributed by: Yutaro Fujimoto, Yurika Masakane, Hirokazu Tanaka and Yutaro Kato, Nagashima Ohno & Tsunematsu
the entire Exclusive Economic Zone (EEZ) under the Offshore Wind Promotion Act. The construction of offshore wind farms usually requires large investment over a long period, and thus the con- struction is susceptible to price fluctuation risks such as rising labour costs, inflation, interest rate hikes, and exchange rate fluctuations. As such, the government is discussing revisions to the bidding rules to enhance the reliability and feasibility of offshore wind projects, not only for future bid projects but also for the existing bid projects from the first to third batches. However, in August 2025, amid these ongoing discus- sions, the consortiums that had won the bids for the first batch (consisting of three project sea areas) with- drew from all three projects, leaving the offshore wind industry in a difficult position. Upon review, the govern- ment determined that the reasons for the withdrawal were inflation and that the criteria to select the winner of public bidding over-emphasised low bid prices. Since offshore wind is considered one of the key measures in the government’s 7th Strategic Energy Plan under the Basic Act on Energy Policy (the “Strategic Energy Plan”), the government is currently discussing further measures to address these problems. 1.7 Announcements Regarding New Policies Carbon-Neutral Target in 2050 In response to the increased global interest in sus- tainability and the potential for economic growth, the Japanese prime minister declared in October 2020 that Japan would aim for net-zero greenhouse gas (GHG) emissions and seek to become a carbon-neu- tral society by 2050. In order to achieve these goals, the government is dis- cussing a variety of measures, including promotion of renewable energy power plants as well as investment and innovation in the power industry. As part of these measures, an amendment to the Act on Promotion of Global Warming Countermeasures, which includes a guiding principle of achieving carbon neutrality in 2050, was passed on 26 May 2021 and became law on 1 April 2022. In addition, the 2023 Amendment also includes decar- bonisation programmes such as new regulation of
grid-scale batteries and the promotion of non-fossil fuels. Further, the amended Act on Rationalising Energy Use and Conversion to Non-Fossil Fuel Energy (Act No 49 of 1979, as amended, the “Rationalisation Act”) encourages energy users to shift towards non- fossil fuel energy. For example, the Rationalisation Act imposes an obligation on certain energy users to report on their fossil fuel energy use and non-fossil fuel energy use, and to prepare for conversion to non- fossil fuel energy. Yet another act, the amended Act on the Promotion of Environmentally Compatible Utiliza- tion of Energy Sources and Effective Utilization of Raw Fossil Fuel Materials by Energy Companies (Act No 72 of 2009, as amended, the “Promotion Act”) encourag- es thermal power plant operators to use decarbonised fuels such as hydrogen and ammonia, and to install a carbon dioxide capture and storage system (CCS) in their thermal power plants. In the context of this movement towards the carbon neutral target, (i) the Act on Promotion of Supply and Use of Low Carbon Hydrogen, etc, for a Smooth Transition to the Decarbonised Growth Economy (the “Hydrogen Society Promotion Act”); and (ii) the Act on Business of Carbon Dioxide Capture and Storage System (the “CCS Act”) were passed in May 2024. The Hydrogen Society Promotion Act was enacted on 23 October 2024, while the CCS Act was fully enacted on 22 May 2026. These are the first pieces of legislation in Japan which focus on business regarding hydrogen and CCS, respectively. The Hydrogen Society Pro- motion Act aims to support certified operators who intend to supply or use low-carbon hydrogen (mean- ing, hydrogen and its compounds, which contribute to the reduction of carbon dioxide, and which are to be designated by legislation) by providing subsidies and certain preferential treatment for permits necessary to conduct such business. The CCS Act establishes the legal framework and regulations for CCS business, especially regarding exploratory drilling, and the stor- age and transport of carbon dioxide. The CCS Act further provides that an operator can conduct carbon dioxide storage and exploratory drilling only when the operator is selected through a public tender process for each area where a stratum suitable for the storage of carbon dioxide exists or may exist. The government is also discussing subsidies to support the introduc- tion of CCS business into Japan.
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