Australia’s government plans to implement its Net Zero Fund by mid-2026, positioning it as a key financing tool to support the country’s transition toward low-carbon manufacturing and industrial production, according to the Department of Industry, Science and Resources.
Net Zero Fund will play a central role in delivering the government’s broader Net Zero agenda, including the Industry Sector Plan, by providing targeted investments to help industries reduce emissions, improve energy efficiency, and adopt cleaner technologies. The fund will primarily focus on large-scale industrial facilities, particularly in sectors where decarbonization is most challenging.
Backed by the national reconstruction fund
Net Zero Fund will operate as a sub-fund of the National Reconstruction Fund (NRF) and will draw from the NRF’s existing A$15 billion allocation. In doing so, it replaces the earlier proposal to earmark up to A$3 billion specifically for renewables and low-emissions technologies.
Delivery of the fund will be overseen by the NRF Corporation (NRFC), which will be authorized to invest through debt, equity, and guarantee instruments, according to the department.
Concessional financing to spur investment
To encourage uptake, the Net Zero Fund will offer more concessional financing terms than the broader NRF portfolio. Its target rate of return will be set at the five-year Australian government bond rate minus 1%, compared with the NRFC’s general portfolio target of the bond rate plus 2–3%.
This concessional structure is designed to de-risk major decarbonization projects and accelerate private sector participation.
Focus on clean manufacturing and supply chains
Beyond emissions reduction, the fund will also support the scaling up of domestic manufacturing for renewable and low-emissions technologies. Eligible activities may include advanced manufacturing projects and businesses producing components used in renewable energy generation, transmission, distribution, or storage.
Examples cited include the manufacture of wind turbine components, batteries, solar panels, hydrogen electrolysers, as well as projects related to energy efficiency, recycling, and waste reduction.
To qualify for support, projects must be wholly or predominantly Australia-based and aligned with the government’s designated priority areas.
Strong industry backing
Feedback received during an online consultation process indicated strong industry support for the Net Zero Fund, particularly for initiatives targeting large-scale industrial decarbonization, hard-to-abate sectors, and advanced manufacturing. The government views the fund as a cornerstone of its strategy to ensure Australia’s industrial base remains competitive while meeting long-term climate commitments.
