Net Zero Fund: proposed design

Overview

The Australian Government is establishing a new $5 billion Net Zero Fund. The new fund will be essential for delivering the Net Zero Plan and enabling major investments by large industrial facilities in decarbonisation and energy efficiency. The fund will also support manufacturing renewable and low emissions technologies.

The Net Zero Fund will be a sub-fund of the National Reconstruction Fund (NRF) drawing from within its existing $15 billion allocation. The NRF Corporation (NRFC) will be responsible for delivery of the Net Zero Fund.

The government is now consulting industry on design of the fund to ensure its fit for purpose.

Proposed design

The Net Zero Fund’s proposed scope is to provide $5 billion in funding to:

• support large industrial facilities seeking to decarbonise, including investing in the technologies and capital infrastructure required to transition to lower emissions or more productive processes

• support scale up of manufacturing renewable and low emissions technologies.

The Net Zero Fund will focus on supporting large-scale industrial facilities as they decarbonise their assets. This will ensure that Australia retains industrial capabilities vital to our national interest while working towards our 2035 target.

This focus is consistent with the Future Made in Australia agenda to:

• maximise the economic and industrial benefits of the move to net zero

• secure Australia’s place in a changing global economic and strategic landscape.

Consultation questions

We are seeking industry views on the following key issues around Net Zero Fund design:

1. What are the types of projects or capital expenditure that should be supported to achieve the Net Zero Fund’s objectives?
   • Consider the level of investment required for large industrial decarbonisation and/or manufacturing renewable and low emissions technologies. This includes the relevant structure and combination of funding sources from government and the private sector.
   • What are the existing commercial barriers to these investments reaching final investment decision?
2. What financing mechanisms are best suited for these investments, based on the mechanisms available to the National Reconstruction Fund e.g. loans, equity, guarantees?
   • Should corporate financing be within the scope of the fund? For example equity financing of companies or convertible options.
   • Consider the specific parameters of any concessional support required. For example interest rates, risk tolerances, forgiveness clauses, equity or debt structures, repayment periods.
   • Consider current barriers to the National Reconstruction Fund investment in large industrial decarbonisation and/or manufacturing renewable and low emissions technologies. How can the design of the Net Zero Fund remove these barriers?
3. How can the Net Zero Fund complement established financing vehicles such as the Clean Energy Finance Corporation?
• Consider the best ways to leverage existing capabilities of the Clean Energy Finance Corporation to help rapid, effective implementation of the Net Zero Fund.

More information

• Read about the Australian Government’s 2035 Net Zero Plan and target

• Read more about the National Reconstruction Fund Corporation on nrf.gov.au