Japan's Ministry of Economy, Trade and Industry (METI) has requested JPY 1.26 trillion ($7.88 billion) for green transformation measures under its fiscal year 2027 budget proposal, more than double the JPY 605 billion ($3.79 billion) allocated in the initial fiscal year 2026 budget.
METI's overall budget request, covering its general and special accounts, amounts to JPY 7.79 trillion ($48.76 billion). The proposed allocations remain subject to approval during Japan's budget negotiations.
Large-scale EAF investments remain a priority
For the steel industry, METI plans to continue supporting capital-intensive projects aimed at converting blast furnace-based production to large electric arc furnaces under its program for energy and manufacturing-process transformation in hard-to-abate industries.
The scheme covers steel, chemicals, cement, and pulp and paper, providing assistance for investments that reduce emissions while maintaining industrial competitiveness. In the steel segment, government support has already enabled major EAF conversion projects, including Nippon Steel's JPY 868.7 billion ($5.44 billion) investment covering three furnaces with a combined annual capacity of approximately 2.9 million mt.
Public procurement to stimulate green steel demand
Alongside production-side support, the Japanese government intends to accelerate the creation of initial demand for green steel, particularly through its use in public infrastructure projects.
METI and the Ministry of Land, Infrastructure, Transport and Tourism have already launched trial projects involving lower-emission steel products such as sheet piles and bridge plates. The trials will assess their circulation, carbon footprints and green transformation value ahead of broader adoption in public works from 2030 onward.
Japan aims to establish a domestic and overseas market for at least three million mt of high-quality green steel annually by the early 2030s, supported by large-scale EAF investments, hydrogen-based steelmaking technologies, increased availability of high-grade scrap and public procurement.
