Australia's Net Zero Fund to be implemented by mid-2026: Govt

The Net Zero Fund will deliver targeted investments to support the transition to less carbon-intensive manufacturing and production processes. It will focus on supporting large-scale industrial facilities to decarbonise, improve energy efficiency and transition to Net Zero.

The Industry Sector Plan identifies the sub-sectors that represent the greatest opportunity and need for decarbonisation, and those most impacted by the economy’s transition.? 

As a sub-fund of the National Reconstruction Fund (NRF), the Net Zero Fund will draw from the NRF’s existing $15 billion allocation. This replaces the existing target funding level of up to $3 billion for investment in the renewables and low emissions technologies priority area.

The NRF Corporation (NRFC) will be responsible for the fund’s delivery and can invest in debt, equity and can give guarantees, a release from the department said.

The Net Zero Fund will be more concessional, at a target rate of return of the five-year government bond rate minus 1 per cent. This is in contrast to the NRFC’s general portfolio’s target rate of return of the five-year government bond rate plus 2-3 per cent. 

The fund will also deliver investments to support scaling up of domestic manufacturing of renewable and low emissions technologies. Eligibility may include opportunities like advanced manufacturing projects.

It can also cover businesses involved in related manufacturing of products for use in or in connection with renewable energy generation, transmission, distribution or storage; energy efficiency; recycling; and waste reduction. Examples could include manufacturing components of wind turbines, batteries, solar panels and hydrogen electrolysers.

Eligibility for debt, equity and guarantee opportunities include proposals that are solely or mainly Australia-based and align with a priority area.

Feedback received during an online consultation showed strong support for initiatives that target large-scale industrial decarbonation, especially for hard-to-abate sectors, and advanced manufacturing projects.

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