The decision was made on March 11 by Japan's Agency for Natural Resources and Energy.

The subsidy will support biomass fuel co-firing tests that the company is considering at existing coal-fired power plants in Vietnam.

In Vietnam, electricity demand is growing at an annual rate of about 10 per cent. This has led to an increase in fossil fuel imports, making improvements to energy self-sufficiency an issue.

Vietnam has also announced that it aims to become carbon neutral by 2050. To address the transition from coal-fired power generation, biomass fuel co-firing could achieve both decarbonisation and improvement of energy self-sufficiency.

The company has set out a vision for 2030 to become a pioneer in the new era of electric power with renewable energy at its core. The company will continue to contribute to the realisation of a decarbonised society by promoting businesses that utilise renewable energy, both in Japan and overseas, centreing on the biomass power generation business.

As reported by Japanese broadcaster NHK, Japan has agreed to invest up to $20 billion in low-carbon energy projects in Vietnam. This comes amid a regional push to reach carbon neutrality in the coming decades. The Japan Bank for International Cooperation and private companies will lead the investments in 14 projects, including wind power plants.

"Japan wants to provide maximum support for Japanese firms to take advantage of these opportunities and participate in Vietnam's decarbonisation market," said Japanese Ambassador to Vietnam Ito Naoki.