The Core Framework of Tokyo's Energy-Efficient AC Subsidy
To achieve carbon neutrality by 2050, Tokyo has offered an energy-efficient renovation subsidy program since 2022, in which "AC replacement" is the sub-project with the widest coverage and fastest review. The core logic of this subsidy is to encourage you to retire old, high-consumption air conditioners and install new, high-efficiency equipment, with Tokyo directly subsidizing part of the installation cost.
The program is open to SMEs, small-scale operators (including sole proprietors), and non-profit organizations. For Chinese business owners in Japan, as long as you have a registered company or commercial sole proprietorship in Tokyo, hold a business license, and have tax filing records, you are in principle eligible to apply.
Key data points:
- Subsidy rate: 40–66% for industrial/commercial facilities (depending on the depth of renovation)
- Maximum subsidy per business site: JPY 2,000,000
- Covered AC types: integrated replacement of indoor units, outdoor units, and control systems
- FY2023 approval rate: about 78% (subject to the reviewing authority's published data)
- Average review period: review completed within 60–90 days after submission
Subsidy Amount and Rate Explained: How Much Can You Get
This is the most practical question. Tokyo's AC subsidy is not a fixed amount but calculated as a certain percentage of "eligible expenses," subject to the dual constraints of a total cap and a subsidy rate.
Subsidy Rate Structure
Depending on the renovation content, the subsidy rate falls into two tiers:
| Renovation Type | Subsidy Rate | Applicable Conditions | |---------|--------|---------| | AC-only replacement | 40% | Replacing only AC equipment, no other energy-saving work | | Comprehensive energy-saving renovation (AC + lighting/insulation, etc.) | 66% | Multiple energy-saving projects at once, better results |
Actual Subsidy Calculation Examples
Case 1: Single AC replacement for a small/medium restaurant
- New AC purchase + installation: JPY 500,000
- Subsidy rate (single item): 40%
- Subsidy available: JPY 500,000 × 40% = JPY 200,000
- Your out-of-pocket cost: JPY 300,000
Case 2: Comprehensive renovation for a small office (AC + LED lighting)
- Total renovation cost: JPY 1,500,000 (AC JPY 1,000,000 + lighting JPY 500,000)
- Subsidy rate (comprehensive): 66%
- Subsidy available: JPY 1,500,000 × 66% = JPY 990,000
- Your out-of-pocket cost: JPY 510,000
Subsidy Upper and Lower Limits
- Maximum subsidy per business site: JPY 2,000,000 (any excess is self-funded)
- Minimum subsidy amount: only projects of JPY 200,000 or more are eligible
- Multiple sites of the same company: can be applied for separately, but the total subsidy amount is subject to the reviewing authority's final decision
Applicants and Eligibility Requirements: Do You Qualify
Not every business in Japan can apply. Tokyo sets clear eligibility limits on applicants, and understanding these is crucial to a successful application.
Core Eligibility Requirements
1. Corporate / sole-proprietor status
- Corporations registered with Japan's National Tax Agency (kabushiki kaisha, yugen kaisha, godo kaisha, etc.)
- Sole proprietors (business notification already filed)
- Chinese business owners must hold a residence card (in principle a work visa or a Business Manager visa)
- Japanese nationals or long-term residents are prioritized, but holders of student or technical intern visas are not eligible
2. Tax compliance record
- A formal tax filing in the previous fiscal year (per-capita levy filing or corporate tax filing)
- No major tax violations (tax arrears, underreporting)
- For newly established companies (less than 1 year old), proof of the representative's personal tax record is required
3. Business premises conditions
- The renovation target must be within Tokyo, with a clear specific address
- Must be owned by the applicant company or under a long-term lease (contract term of 2 years or more)
- Temporary or short-term rental premises are not eligible
4. Legal compliance conditions
- The applicant company has no litigation disputes or bankruptcy record
- Engaged in lawful business (restaurants, offices, retail, and other common industries are all acceptable)
- No record of a major safety incident in the year prior to application
Common Eligibility Questions
Can foreigners apply? Yes. As long as you have a formal corporate or sole-proprietor registration in Japan, hold a valid residence card, and meet the tax requirements, you are eligible to apply.
Can a new company (6 months old) apply? In principle, a new company needs to submit proof of the representative's personal tax record and undergo a special review by the authority. The approval rate is relatively low, so we recommend applying after being established for at least 1 year.
I have multiple branches—can they all apply? Yes, but each branch must apply separately, and there is a cap on the total subsidy amount for a single corporate group (subject to the reviewing authority's decision).
Scope of Eligible Expenses: Which Costs Are Reimbursable
You might assume any AC-related expense can be claimed, but in practice the subsidy scope is strictly defined. Only expenses within the scope of "eligible expenses" can be counted toward the subsidy base.
Clearly Subsidizable Expenses
| Expense Type | Subsidizable | Notes | |---------|--------|------| | New AC equipment purchase | ✅ Yes | Must meet energy-efficiency standards (certified by the Japan Refrigeration and Air Conditioning Industry Association) | | AC installation labor | ✅ Yes | Includes ductwork, electrical connections, test operation | | Old AC dismantling + recycling/disposal | ✅ Yes | Requires an electronic waste recycling certificate (リサイクル伝票) | | Control system update (smart thermostat) | ✅ Yes | Only counts if installed together with the AC | | Indoor/outdoor unit ducting/wiring materials | ✅ Yes | Must be part of the installation work |
Clearly Non-Subsidizable Expenses
| Expense Type | Subsidizable | Reason | |---------|--------|------| | Simple repair or cleaning | ❌ No | Not within the "replacement" category | | AC extended warranty/insurance | ❌ No | Operating/maintenance cost, not equipment cost | | On-site renovation (wall alterations, etc.) | ❌ No | Beyond the scope of AC installation | | Electricity bill subsidy | ❌ No | The subsidy targets equipment cost, not operating cost | | Third-party consulting/design fee (>JPY 100,000) | ❌ No | Design fees are capped and require prior approval |
Actual Example
Restaurant kitchen AC replacement project
New AC purchase (3 units) .......... JPY 1,200,000 ✅
Installation labor ................. JPY 250,000 ✅
Old AC dismantling + recycling ..... JPY 80,000 ✅
Wiring materials ................... JPY 30,000 ✅
Kitchen wall renovation ........... JPY 300,000 ❌ (outside subsidy scope)
━━━━━━━━━━━━━━━━━
Total eligible expenses ........... JPY 1,560,000
Subsidy rate (single item) 40% .... = JPY 624,000
Important reminder: Eligible expenses must be pre-approved by Tokyo's competent department before application; they cannot be retroactively recognized. We recommend submitting a project outline to the "Tokyo Metropolitan Bureau of Environment" for cost review before signing any procurement contract.
Application Process and Timeline: From Idea to Subsidy Payout
The subsidy application follows a strict process. Understanding the timing requirements and required documents at each stage can significantly increase your chances of success.
Phased Timeline
Phase 1: Preparation (2–4 weeks before application)
| Time | Task | Required Documents | |------|------|---------| | Week 0 | Confirm company eligibility, understand the subsidy system | Business license, corporate registration certificate | | Weeks 1–2 | Contact 3+ AC installers for quotes | Quotations, product specification sheets | | Weeks 2–3 | Confirm work plan and costs with the installer | Construction design drawings, detailed quotation | | Weeks 3–4 | Prepare the application and attachments | See table below |
Phase 2: Application submission (Weeks 4–8)
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Week 4: Submit the "preliminary application" (outline review) to the Tokyo Metropolitan Bureau of Environment
- Review period: about 2 weeks
- Success rate: about 85% (only verifies basic eligibility and cost reasonableness)
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Week 6: After receiving "preliminary approval," sign a formal contract with the installer
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Week 8: Submit the "main application" (formal application) to Tokyo
- Requires: proof of signed contract, a letter of commitment, a construction schedule
Phase 3: Review (8–12 weeks after submission)
- Tokyo conducts a re-examination of eligibility and a technical review
- Average review period: 60–90 days
- Once the subsidy recipient is confirmed, a "Subsidy Grant Decision Notice" is issued
Phase 4: Construction implementation (4–8 weeks after decision)
- Begin AC installation work
- Photographic documentation of the construction process is required (3 photos each of before, during, and after installation)
- Submit a completion report to Tokyo within 5 days of completing the work
Phase 5: Subsidy payout (4–6 weeks after the completion report)
- Tokyo conducts a final confirmation
- Issues a "Subsidy Payment Decision Notice"
- The subsidy is transferred to the designated bank account
- Total cycle: from the initial application to the subsidy payout, an average of 150–180 days (about 5–6 months)
Required Document Checklist
Preliminary application stage:
- The applicant company's corporate registration certificate (or sole-proprietor registration certificate)
- Previous fiscal year corporate tax return / income tax return
- Tokyo's designated "Energy-Saving Renovation Preliminary Application Form"
- AC equipment specification sheet and energy-efficiency label (certified by the Japan Refrigeration and Air Conditioning Industry Association)
- Quotation and construction design drawings issued by the installer
Main application stage:
- The formal construction contract signed with the installer
- The company representative's ID (copy of the residence card)
- Proof of ownership or lease of the business premises
- Construction progress schedule
- Bank account information (for receiving the subsidy)
Completion report stage:
- Certificate of construction completion (issued by the installer)
- Construction photos (before, during, after)
- Old AC recycling certificate (リサイクル伝票)
- Final invoice and payment vouchers
- Completion inspection report
Common Application Pitfalls and Bonus Points: Boosting Your Approval Rate
Five Common Pitfalls
Pitfall 1: Assuming cheaper AC is always better
- Flawed logic: many businesses deliberately choose low-priced AC to inflate the subsidy ratio's numerator
- Consequence: Tokyo verifies price reasonableness via market surveys, and inflated quotes will be struck out
- Correct approach: choose brand products within the market average price range (Daikin, Mitsubishi, Hitachi, etc.), with a price deviation of no more than ±15%
Pitfall 2: Thinking about the subsidy after the fact
- Flawed logic: applying for the subsidy after the AC is already installed
- Consequence: not eligible—Tokyo explicitly requires that "the subsidy application must be submitted before the procurement contract is signed"
- Correct approach: consult the subsidy authority before any AC purchase decision
Pitfall 3: Concealing multiple sites or multiple companies
- Flawed logic: registering multiple subsidiaries to apply separately and circumvent the subsidy cap
- Consequence: Tokyo conducts a related-party review; if fraud is found, eligibility is revoked and a refund demanded
- Correct approach: honestly declare all related-company information; if you need multiple sites, consult the authority about the total cap
Pitfall 4: Applying under a personal name
- Flawed logic: a sole proprietor applies using a personal account and personal purchase records
- Consequence: the subsidy cannot be paid out because the subsidy target is the "business entity," not the individual
- Correct approach: even as a sole proprietor, submit all documents under the "business name"
Pitfall 5: Doing the installation yourself to save money
- Flawed logic: AC installation seems simple, so having friends install it saves labor cost
- Consequence: you cannot obtain a proper "certificate of construction completion" or "installer qualification certificate," and Tokyo will not accept it
- Correct approach: you must commission a licensed professional installer
Four Bonus Points (Raising Your Approval Odds)
Bonus 1: Choose high-efficiency AC
- The subsidy rate can rise from 40% to 50%
- Condition: choose "4-star" or "5-star" high-efficiency products certified by the Japan Refrigeration and Air Conditioning Industry Association
- Corresponding brands: Daikin U series, Mitsubishi Haou series, Fujitsu X series, etc.
Bonus 2: Carry out a comprehensive energy-saving renovation
- The subsidy rate rises from 40% to 66%
- Condition: replace the AC + 2 or more other energy-saving measures (LED lighting, insulated windows, solar panels, etc.)
- The added cost is limited, but the subsidy rate increases significantly
Bonus 3: Choose an installer with carbon-offset partnerships
- Installers with "eco-construction certification" get priority review
- Condition: the installer must hold the "Energy-Saving Contractor" qualification issued by the Tokyo Metropolitan Bureau of Environment
Bonus 4: Apply under an SME "green transformation" plan
- The subsidy rate can be prioritized at the highest tier (66%)
- Condition: also submit a 3-year corporate carbon-reduction commitment letter
- For Chinese startups, demonstrating a "sustainable development philosophy" can actually make approval easier
Actual Probability Reference
| Application Condition Combination | Estimated Approval Rate | Average Review Period | |-----------|-------------|----------| | Single-item AC replacement, reasonable price | 75–80% | 75 days | | Comprehensive renovation (AC + lighting) | 85–90% | 85 days | | Includes high-efficiency product selection | 88–93% | 70 days | | Backed by a carbon-reduction commitment letter | 90%+ | 65 days |
FAQ
Q1: I am Chinese and hold a work visa (Engineer/Specialist in Humanities/International Services)—can I apply?
A: You can apply, but two additional conditions must be met. First, your work visa must be consistent with the business your company operates—for example, if you hold a technical visa at an IT company but also open a consulting company, that would not qualify. Second, the company itself must be formally registered with Japan's National Tax Agency, and you must be the legal representative or a shareholder. If you are merely an employee holding a work visa, you cannot apply for the subsidy on behalf of the company. We recommend first confirming with the Tokyo Metropolitan Bureau of Environment whether your visa type permits engaging in this business.
Q2: Our company was just established 3 months ago—can we apply? We have no tax filing record for the previous fiscal year.
A: A newly established company in principle does not meet the requirement of "a tax filing record for the previous fiscal year." However, you have two alternatives: first, submit the representative's previous-year personal income tax return and tax certificate to prove a formal income record; second, wait until the company has been established for a full year before applying (which yields a higher approval rate, about 85% or more). The first-time approval rate for new companies is usually 50–65%, so we recommend the second option.
Q3: Our AC quote is JPY 1,500,000—how much subsidy can we get? Is there a cap?
A: Calculated as a single-item replacement, the subsidy rate is 40%, i.e.: JPY 1,500,000 × 40% = JPY 600,000. But note two cap limits. First, the maximum subsidy per business site is JPY 2,000,000 (your case alone does not exceed this). Second, if any single expense item in the subsidy base (e.g., the AC unit itself) exceeds the market price by more than 20%, it will be reduced. We recommend obtaining quotes from 3 installers for comparison to ensure JPY 1,500,000 is a reasonable market price, then attaching all quotes for cost review when submitting the preliminary application to Tokyo.
Q4: How long after the work is completed will I receive the subsidy? Is it possible that I have to refund money if I'm not approved after applying?
A: After the work is completed, submitting the completion report for Tokyo's re-review takes about 30–45 days; once approved, the subsidy is transferred to the designated account within 7–14 business days. From the initial application to payout, the whole cycle is usually 150–180 days. As for refund risk, it normally does not occur; but if false materials, seriously inflated prices, or workmanship problems are found during the review, Tokyo may demand a partial refund or revoke subsidy eligibility. To avoid this risk, be sure to keep all photos of the construction process, invoices, and payment vouchers.
Q5: We have 3 branches that all want to replace their AC—can we apply separately? Is there a cap on the total subsidy?
A: Yes, you can apply separately. Each branch, as an independent "renovation site," can submit its own application, but the conditions must be met: each branch must be within Tokyo, and the applicant company must have legal ownership or a long-term lease (2+ years) for each branch. Regarding the total cap, Tokyo stipulates that the annual total subsidy for a single applicant company generally does not exceed JPY 3–4 million, with the exact figure subject to the reviewing authority's final decision. We recommend first consulting the authority to determine your corporate group's total cap, then applying in batches across fiscal years.
Q6: If the AC installer has no eco-construction certification, will it affect the subsidy application?
A: It will not directly cause the application to fail, but it has two effects. First, construction documents submitted by non-certified installers face stricter review, lowering the approval rate by about 5–10%. Second, you cannot obtain the "bonus" treatment mentioned earlier (a 66% subsidy rate). We recommend prioritizing installers holding the "Tokyo Energy-Saving Contractor" qualification, which can be looked up on the Tokyo Metropolitan Bureau of Environment website. If only non-certified installers are available locally, attach the installer's corporate qualification certificate, construction experience cases (at least 3), and customer reference letters when submitting to Tokyo, and the success rate can still reach 75% or more.
Related Support Policies and Combined Application Strategies
Tokyo's AC subsidy is not an isolated policy; there are other stackable energy-saving subsidy programs, and eligible companies can apply in combination to further reduce costs.
Other Subsidy Programs That Can Be Combined
1. LED Lighting Replacement Subsidy
- Applied together: subsidy rate rises to 66% (comprehensive renovation)
- Standalone lighting subsidy rate: 40%
- Stackable amounts: the two are calculated separately and do not offset each other
2. Building Insulation Renovation Subsidy (commercial buildings only)
- Renewal of windows, walls, roof insulation
- Subsidy rate: 50%
- Stacked with the AC subsidy, the overall subsidy rate can reach 66–75% (via the "comprehensive energy-saving renovation" channel)
3. Solar/Battery Storage Subsidy (applicable to small commercial)
- Standalone subsidy rate: up to 50%
- When applied together with AC, the two subsidies do not conflict and are calculated separately
Real Case: Three-Way Combined Application
Comprehensive renovation case for a mid-sized restaurant business
Project composition:
├─ AC system replacement (3 units) .......... JPY 1,200,000
├─ LED lighting renovation (whole store) .... JPY 500,000
└─ Kitchen exhaust system energy upgrade .... JPY 300,000
━━━━━━━━━━━━━━━━━
Total investment .......................... JPY 2,000,000
Subsidy calculation (comprehensive renovation 66%):
JPY 2,000,000 × 66% = **JPY 1,320,000**
Company out-of-pocket .................... JPY 680,000
vs. AC-only application (40%):
JPY 1,200,000 × 40% = JPY 480,000
Company out-of-pocket ................... JPY 1,520,000
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The comprehensive application gains an extra JPY 840,000 in subsidy
Application Resources and Official Contact Channels
To apply successfully, obtaining accurate, up-to-date information is essential. Below are the main information sources and consultation channels.
Official Information Sources
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Tokyo Metropolitan Bureau of Environment website: www.kankyo.metro.tokyo.lg.jp
- Updates each year's subsidy guidelines every April
- Application forms and bonus scoring sheets can be downloaded
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Subsidy program implementing body: Tokyo Metropolitan Center for Climate Change Actions
- Provides free application consultation services
- Monday–Friday, 9:00–17:00 (Japan time)
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Chinese-language consultation support:
- Tokyo Chamber of Commerce and Industry (has Chinese-speaking advisors)
- The Industry and Economy Section of each ward office (translation can be arranged)
Self-Preparation Checklist
Before formally applying, checking the following items yourself can significantly increase your first-time approval rate:
- ☐ Corporate registration certificate or sole-proprietor registration certificate obtained
- ☐ Previous-year corporate tax / income tax return prepared
- ☐ Quotes confirmed with 3+ installers (for cost-reasonableness review)
- ☐ Ownership or 2+ year lease of the renovation site confirmed
- ☐ Selected AC equipment meets the energy-efficiency standards of the Japan Refrigeration and Air Conditioning Industry Association
- ☐ Whether the installer holds Tokyo's Energy-Saving Contractor certification (for bonus points)
- ☐ Total eligible expenses expected to be in the JPY 200,000–2,000,000 range
Final Thoughts: Seize the Subsidy Window and Plan Your Annual Costs
Tokyo's energy-efficient AC subsidy policy is adjusted every year; the subsidy rate, cap, and bonus conditions may all change. Based on the policy trend over the years, the FY2024–2025 subsidy rate has remained at 40–66%, and business owners should seize this window.
From consultation and application to subsidy payout, the whole cycle takes 5–6 months. This means that if you decide now, at the earliest you could complete a new AC installation and receive the subsidy before this winter—for restaurants, offices, and retail stores facing high electricity bills, this subsidy is enough to offset a year or more of electricity-cost savings.
Final advice: Do not wait, and do not try to figure it out alone. Submit a free consultation request to the Tokyo Metropolitan Center for Climate Change Actions, and they will provide a customized subsidy forecast based on your specific situation (industry, scale, existing equipment condition). For Chinese business owners in Japan, if language is a barrier, you can request Chinese translation services or commission your local Chamber of Commerce and Industry to consult on your behalf.
A subsidy of JPY 400,000–1,000,000 is enough to save a small business owner years of operating costs. This is not an "optional extra" but a real benefit the government has prepared for SME owners.
If you still have questions about the specific application process, cost review, compliance risks, and so on, feel free to consult a professional subsidy advisor at any time to obtain a personalized application plan tailored to your company's situation.