Australian Government Launches $5 Billion Net Zero Fund to Drive Industrial Decarbonisation and Manufacturing Growth

The Albanese Labor Government has unveiled the design of its $5 billion Net Zero Fund, aimed at accelerating industrial decarbonisation, lowering energy costs, and boosting domestic manufacturing of low-emissions technologies across Australia.

Announced as part of the National Reconstruction Fund (NRF) under the Government’s Future Made in Australia plan, the new fund will provide highly concessional finance to help large industrial facilities reduce emissions, improve energy efficiency, and scale up clean technology manufacturing.

The Net Zero Fund, first flagged in the Industry Sector Plan last year, will target a rate of return equivalent to the five-year Australian government bond rate minus one percentage point, enabling the fund to take on higher risk than commercial lenders. This structure is expected to crowd in significant private capital, accelerate clean technology adoption, and unlock new manufacturing investments, particularly in hard-to-abate industrial sectors.

According to the Government, the initiative is designed to improve energy affordability, industrial competitiveness, productivity, and job creation, while supporting Australia’s transition to a low-carbon economy.

The Fund will become operational by mid-2026.

Minister for Industry and Innovation and Minister for Science Tim Ayres said the initiative would strengthen Australia’s manufacturing base while cutting industrial emissions and energy costs.

“Reducing emissions and lowering energy costs across heavy industry is a national challenge that demands leadership, long-term planning and a willingness to invest,” Ayres said.

“Globally competitive financing from the NRF’s Net Zero Fund will crowd in billions of dollars of private investment, drive down industrial energy costs, and support new manufacturing jobs, particularly in regional Australia.”

Ayres added that the National Reconstruction Fund is already backing strategic investments, citing the recent $75 million investment in Alpha HPA in Gladstone and $20 million investment in Diraq’s quantum technology development.

Minister for Climate Change and Energy Chris Bowen said the fund would enable major energy users to invest in clean energy upgrades sooner, reducing exposure to volatile fossil fuel prices.

“Lowering the cost of finance means more projects become viable, more supply chains can grow, and industrial emissions can fall faster,” Bowen said.

“If we want a Future Made in Australia, we must support our hardest-to-abate industries to modernise and remain globally competitive. This fund backs Australian workers, manufacturers, and regional communities.”

The Government said the Net Zero Fund would play a central role in delivering globally competitive decarbonisation finance, reinforcing Australia’s position as an attractive destination for clean industrial investment.