Note: Japanese domestic programs
The subsidies and tax incentives described on this page are programs offered by the Japanese government and are generally available only to businesses operating in Japan. They are presented here for reference.
The Energy-Saving & Non-Fossil Transition Subsidy (Sho-Ene / Hikaseki Tenkan Hojokin) is a program that supports capital investment to advance energy saving and the transition to non-fossil energy, either across an entire factory or business site or per piece of equipment. It encourages the adoption of high-efficiency equipment, advanced equipment, EMS, and electrification / decarbonized-fuel conversion, promoting energy cost reduction and decarbonization at the same time.
In This Article
Note
Subsidy rates, maximum amounts, application schedules, and requirements change with each application round. The information below is an overview to help you understand the program framework. Before applying, always check the latest official application guidelines on the official website.
Program Overview
The Energy-Saving & Non-Fossil Transition Subsidy supports capital investment that advances energy saving and the transition to non-fossil energy, either across an entire factory or business site or per piece of equipment. It encourages the adoption of high-efficiency equipment, advanced equipment, EMS (energy management systems), and electrification / decarbonized-fuel conversion, promoting energy cost reduction and decarbonization at the same time.
Application Types
The program has two main application types. The "factory/business-site type" covers initiatives that achieve major energy savings across an entire factory or business site, with categories such as the advanced category, general category, SME investment promotion category, supply-chain collaboration category, and EMS introduction. The "per-equipment type" is a relatively easy-to-use type that improves energy efficiency per designated piece of equipment, such as air conditioning, boilers, machine tools, and LED lighting. Automatic lathes are included among these machine tools.
Basic Requirements by Application Type
| Application type | Typical requirements | Scope of eligible expenses |
|---|---|---|
| Factory/business-site type | At the factory/business-site level, meet requirements such as an energy-saving rate and increase in the non-fossil share, energy savings plus non-fossil usage, or an improvement rate in energy consumption intensity. Investment payback period and applicant eligibility requirements differ by category. | Design, equipment, and installation costs |
| Per-equipment type | Typical requirement: through replacement, new installation, or modification of designated equipment, satisfy at least one criterion per piece of equipment, such as an energy-saving rate of 10% or more, energy savings of 1 kl or more, or energy savings per expense of 1 kl per 10 million yen or more. | Mainly equipment costs. Installation costs are also eligible under the electrification / decarbonized-fuel conversion type, etc. |
Subsidy Rates & Maximum Amounts
| Application type / category | Main target | Subsidy rate | Maximum subsidy amount |
|---|---|---|---|
| Factory/business-site type: Advanced category | Upgrades to advanced equipment and systems | SMEs etc.: up to 2/3 Large companies and others: up to 1/2 | Single year: 1.5 billion yen/year With non-fossil application: 2 billion yen/year Multi-year and collaborative projects: up to 3–4 billion yen |
| Factory/business-site type: General category | Upgrades to custom-engineered or designated equipment | SMEs etc.: up to 1/2 (up to 1/3 under certain conditions) Large companies etc.: up to 1/3 (up to 1/4 under certain conditions) | Single year: 1.5 billion yen/year With non-fossil application: 2 billion yen/year Multi-year: up to 2–3 billion yen |
| Factory/business-site type: SME investment promotion category | Equipment upgrades by SMEs etc. | SMEs etc.: up to 1/2 (up to 1/3 under certain conditions) | Single year: 1.5 billion yen/year With non-fossil application: 2 billion yen/year Multi-year: up to 2–3 billion yen |
| Per-equipment type: Standard category | Upgrades to designated equipment | Up to 1/3 | 100 million yen per project |
| Per-equipment type: GX per-equipment, manufacturer enhancement category | Energy-saving equipment from manufacturers with declared GX commitments | Up to 1/3 | 300 million yen per project |
| Per-equipment type: GX per-equipment, top-performance category (replacement) | Upgrades to equipment with exceptionally high energy-saving performance | Up to 1/2 | 300 million yen per project |
| Per-equipment type: GX per-equipment, top-performance category (new installation) | New installation of top-performance equipment | Up to 1/5 | 300 million yen per project |
| Per-equipment type: Electrification / decarbonized-fuel conversion type | Electrification, low-carbon fuel conversion, hydrogen readiness, etc. | Replacement/modification: up to 1/2 New installation: up to 1/5 | Replacement/modification: 300 million yen per project Electrification: 500 million yen per project New installation: 300 million yen per project |
| EMS introduction (Type IV) | Introduction of energy management systems | SMEs etc.: up to 1/2 Large companies and others: up to 1/3 | 100 million yen per project |
Upcoming Schedule
| Item | Dates / details |
|---|---|
| 2nd application round | Monday, June 1, 2026 to Thursday, July 9, 2026 |
| 1st application round (reference) | Monday, March 30, 2026 to Monday, April 27, 2026, arriving by 5:00 p.m. |
| Selection & grant decision | Varies by application round and application type. For the 1st round, the grant decision was scheduled for mid-June 2026. For the timing of the 2nd round's selection and grant decision, check the latest SII application information. |
| Project completion deadline | By the deadline set in the official application guidelines. For the 1st round, guidance indicated in principle by January 31, 2027. |
Frequently Asked Questions (FAQ)
Q. Are machine tools eligible?
A. The designated equipment for the per-equipment type includes "machine tools." You need to confirm that the upgrade meets the energy-saving requirements and that the equipment is registered and designated as eligible.
Q. Can I apply for a simple replacement?
A. A simple replacement of aging equipment is not enough; you must demonstrate energy-saving or non-fossil transition effects. For the per-equipment type, it is important to confirm requirements such as an energy-saving rate of 10% or more, or energy savings of 1 kl or more.
Q. May I place an order before the grant decision?
A. As a rule, expenses ordered, contracted, or paid before the grant decision are not eligible for the subsidy. Always follow the rules in the official application guidelines and start the project after the grant decision.
Summary
In response to rising energy prices and decarbonization needs, this subsidy can be used across a wide range of projects, from large-scale energy saving at the whole factory or business-site level to per-equipment upgrades of machine tools, air conditioning, boilers, and more. Because subsidy rates and maximum amounts differ greatly by type, it is important to sort out early which equipment you will install, the effect calculations, and the investment payback period. For details of each application type and the latest application information, check the official website. See also The Subsidy Process from Application to Payment.
Reference (official information): Energy-Saving & Non-Fossil Transition Subsidy 2026 official site