The Government will shoulder a third of the costs for projects, including wind-power plants and the production of ethanol fuel from methane generated at waste disposal plants, reports Japan Times.
The scheme will cost 300 million yen (US$2.5 million), and in return, Japan will receive nearly 1.2 million tonnes of credits per year.
Under the Kyoto Protocol, Japan has to reduce its emissions by 6% of the 1990 total by 2008-2012.