Prime Minister Takaichi’s administration recently identified 17 strategic fields for public-private investment to revive Japan’s economy – with clean energy (GX), fusion power, and energy security at the top. Unlike many government schemes, which tend to channel support to large corporations, this push is likely to direct meaningful capital toward startups.

Innovation in Japan traditionally takes place within major conglomerates, backed by academia and state funds. Today, however, an increasing share of talent is gravitating toward startups to develop new solutions – a shift the government has begun to embrace. Since 2022, a core state priority has been strengthening Japan’s startup ecosystem in the hope that new ventures can inject dynamism into a sluggish economy. Japan has managed annual GDP growth of 2% or more only twice in the past decade.

Yet funding has been a persistent bottleneck. Clean-tech ventures in particular have struggled to scale: just 4% of domestic startup investment flows into the sector, compared with 14% globally. The result is visible in the rankings: Japan has just one company in the Global Cleantech 100, versus roughly 50 in the U.S. and nine each in the UK and Canada.

The new 17-sector investment drive, along with other policy moves, suggests that this may now be shifting. Following last year’s revision of the Basic Energy Plan and the rollout of the related GX2040 industrial strategy, METI earmarked ¥200 billion for GX-related startups to be deployed over the next three to five years. Deep-tech entrepreneurs – those tackling complex industrial problems – are receiving increased official attention.

Against this backdrop, and as stocks of companies pitching novel clean-energy solutions rally, Japan NRG has examined which clean- and deep-tech startups could gain traction. In this two-part series, we highlight some of the firms using AI and digital platforms to advance GX, strengthen energy security, and improve sustainability.