By Daniel Leussink and Leika Kihara
TOKYO (Reuters) - Japan's ruling party will urge the government to lay out a big, decade-long spending programme to promote green investment, a draft proposal obtained by Reuters showed on Friday, a nod to Prime Minister Yoshihide Suga's carbon emission goals.
Suga has made a green society one of his key policy priorities, pledging that Japan will aim for net-zero emissions by 2050.
The government should create a fund with a size "comparable to global standards" that supports companies investing in green technology, the Liberal Democratic Party (LDP) said in the draft proposal, without suggesting a specific figure.
"By deploying all policy means available, the public and private sectors must work together to achieve zero carbon emission in 2050," it added, calling for deregulation and tax breaks to promote green investment.
The proposal also urged the government to take steps to promote electric vehicles and battery development, and called for expanding or creating new state-backed loan and loan guarantee schemes to support firms hit by the COVID-19 pandemic.
The proposal, subject to change after further deliberations within the party, is set to be finalised later on Friday. It will be presented to the government on Monday, a ruling party source said.
The LDP's recommendations will serve as a basis for the government's deliberations on a fresh stimulus package, which Suga has ordered his cabinet to develop.
The proposal suggests incentives to promote green investment will be among key pillars of the package, along with spending to cushion the immediate economic blow from COVID-19.
"It seems (the new package) will clearly be different from just providing support to cope with the pandemic," said Takeshi Minami, chief economist at Norinchukin Research Institute.
"There will be an increasing number of measures with an eye on a post-COVID society," he said.
With a resurgence in infections clouding the economic outlook, Japan announced on Friday it would extend until February next year a subsidy scheme that compensates companies for retaining jobs while temporarily closing business due to the pandemic.
Ruling party executives have called for compiling an extra budget worth around 20-30 trillion yen ($192-$288 billion), which will fund part of the stimulus package.