Japan’s Ministry of Economy, Trade and Industry (METI) has requested ¥1.26 trillion in green transformation funding in its fiscal 2027 budget proposal, significantly higher than the initial budget for fiscal 2026. The increase shows the government’s strong policy support for industrial decarbonization.

In the financial sector, Japan has provided more than ¥3 trillion in dedicated financing for the steel industry. Steelmakers that use 100% zero-carbon electricity can also receive capital subsidies covering up to 50% of their investment.

Although Japan’s strong subsidies and mandatory procurement policies are based on its relatively smaller steelmaking capacity and cannot be directly applied elsewhere, its focus on building the market and connecting the entire supply chain, from end-user demand to raw materials, offers valuable lessons.

The key to overcoming the challenges facing the green steel market is to create a system in which low-carbon production brings clear benefits, while high-carbon production faces greater restrictions.