Japan’s Green Fund commenced operations in July 2013 after the Minister of the Environment announced the Finance Initiative to Build a Low-Carbon Society, which highlighted the need to use private capital to tackle global warming, in January of that year. The Green Finance Organisation (GFO), the body selected by the Ministry of the Environment to govern the Green Fund, is comprised of an Executive Board and operations team that regularly receive external counsel from an advisory committee of legal, technological and other experts. The Green Fund is capitalised by a portion of the revenue of Tax for Climate Change Mitigation, a carbon tax established in 2012 on fossil fuel consumption.


The Green Fund was established in response to the challenges associated with building out a clean energy projects, including high up-front capital costs for development and construction as well as long operation and income phases that increase project risk for project owners/developers. The Green Fund’s objective is to solidify the business case of small to large-scale clean energy projects by making equity and mezzanine investments that attract further capital from private sources. Equity investments are limited to less than 50% of the total equity amount and in some cases, a sub-fund will be created that aggregates equity investments from GFO and other sponsors prior to funding the project vehicle.

This investment strategy aims to decrease the debt to equity ratio to facilitate loan financing as well as support deployment of new clean technologies in the green economy. Successes are publicised and used to encourage expanding green investment to regional private sectors across the country.

Investments are made in projects that not only reduce greenhouse gas emissions, but also stimulate local economies. This is achieved by working with locally-based companies and, for some cases, focusing particularly on the project development phase during which there is no revenue generation. The GFO invests specifically in projects with new business models that can be replicated in regional communities.

The GFO aims to engage with local communities, and this engagement goes beyond clean energy project deployment. Often, profits from projects are invested in regional low-carbon efforts. For example, a portion of a 7MW solar project’s profits is donated to the community’s fund for local environmental initiatives, and that project site is used as an education facility on clean energy. Another example is a small-scale hydropower project that includes the creation of a scholarship fund for children.

In addition to investing in projects, the Green Fund shares information associated with projects with other project owners and private actors to aid their clear understanding on the technical and financial feasibility and sustainability of low-carbon energy projects, including wind, solar, small-scale hydro, biomass,  and geothermal.


Since inception in FY2013 and through March 2018, GFO has, through the Green Fund, made USD 123 million in investment commitments into projects with a total value of over USD 1000 million, achieving a private source leverage ratio of over 11:1 (the ratio is calculated taking account of additional but undisclosed public and private investment). Projects in which GFO has invested are expected to avoid around 1 million tons of CO2 every year.

Exchange rate 100 JPY: 1 USD

Last updated May 1, 2019

Japan Green Finance Organisation

Additional Reference

For more information about the Green Finance Organisation, including recent announcements and transaction descriptions, visit the GFO website. (note: site content is only in Japanese).