The Net Zero Fund is essential to help deliver the government's Net Zero Plans, including the Industry Sector Plan.
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.
The Net Zero Fund will be implemented by mid-2026.
Design and eligibility
The Net Zero Fund will be more concessional, at a target rate of return of the 5-year government bond rate minus 1%. This is in contrast to the NRFC's general portfolio's target rate of return of the 5-year government bond rate plus 2-3%.
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 Net Zero Fund will support the Industry Sector Plan. The plan identifies the subsectors that represent the greatest opportunity and need for decarbonisation, and those most impacted by the economy's transition.
The fund will also deliver investments to support the 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
- waste reduction.
Examples could include manufacturing components of:
- wind turbines
- batteries
- solar panels
- hydrogen electrolysers.
Eligibility for debt, equity and guarantee opportunities include proposals that are solely or mainly Australian-based and align with a priority area.
Consultation
To make sure the Net Zero Fund's design is fit for purpose, we held an online consultation process which received over 120 written submissions. Respondents included:
- industrial manufacturing and energy sector organisations
- unions
- researchers
- think tanks
- representative bodies.
The minister also led an industry forum, attended by over 60 executive-level representatives.
Consultation feedback showed strong support for initiatives that target large-scale industrial decarbonation, especially for hard-to-abate sectors, and advanced manufacturing projects.
Consultation feedback sought industry views on the main issues around the fund's design. This included:
- project types and capital expenditure
- financing mechanisms
- how the fund will work with established financing vehicles.
A summary of online consultation is now available.
