The Australian government has announced the design of a new $5 billion Net Zero Fund aimed at supporting manufacturing and industrial decarbonisation, with the initiative positioned as a central element of its Future Made in Australia strategy.
In a joint media release, Ministers Tim Ayres and Chris Bowen said the fund, to be established within the National Reconstruction Fund, is intended to help energy-intensive manufacturing and industrial facilities reduce emissions and energy costs while supporting the domestic manufacturing of low-emissions technologies.
Minister for Industry and Innovation Tim Ayres said reducing emissions while maintaining competitiveness is a significant challenge for Australian manufacturing.
“Backing Australian heavy industry and manufacturing to reduce its emissions and lower energy costs is a big national challenge that demands leadership, planning and an appetite for risk,” he said.
According to the government, the Net Zero Fund will provide highly concessional finance to support upgrades in hard-to-abate sectors and encourage investment in Australian manufacturing capability.
The fund will target a rate of return below commercial levels, set at the five-year Australian government bond rate minus one percentage point, allowing it to take on higher risk and attract private capital alongside public investment.
The government said the approach is designed to improve competitiveness, support jobs and strengthen local supply chains, particularly in regional areas where large manufacturing and industrial operations are based.
Minister for Climate Change and Energy Chris Bowen said the fund is designed to help manufacturers invest sooner in clean energy upgrades.
“By lowering the cost of finance for clean energy upgrades, the Net Zero Fund helps big energy users invest sooner, use energy more efficiently and reduce the risks of volatile fossil fuel prices,” he said.
The Net Zero Fund is expected to become operational by mid-2026, with ministers stating it will play a role in improving energy affordability while supporting Australia’s transition to lower-emissions manufacturing and industrial activity.
