The Department of Industry, Science and Resources (DISR) has consulted on the design of the Australian Government’s new $5 billion Net Zero Fund.
Australia’s economic transition represents a moment of great opportunity.
Climateworks has extensively analysed and written about how Australia can leverage its advantages in the global net zero transition and about building an economy powered by clean energy and the nation’s abundant resources.
The Net Zero Fund is an important element for building on existing momentum and delivering industrial decarbonisation.
Climateworks supports its objectives of investing in technologies and infrastructure to enable large industrial facilities to decarbonise, and scaling up the manufacture of renewable and low-emissions technologies.
A well-designed fund presents an opportunity to account for the challenges that have constrained investment in this space.
We also emphasise the importance of integrating this fund with existing government actions on industrial transformation.
Climateworks suggests DISR consider the following recommendations as it designs the Net Zero Fund:
- Base Net Zero Fund decisions on achievement of the upper bound of Australia’s emissions reduction target, including by adopting emissions reduction metrics in both project approval and reporting processes, ensuring the fund enables Australia to meet or exceed its emissions targets and fulfil its Paris Agreement obligations and the goal to limit warming to 1.5 degrees.
- Ensure that work to set up the Net Zero Fund strengthens and supports the establishment of the Investor Council and the Future Made in Australia Front Door with the purpose of catalysing private sector financing and creating a funding stack that makes a project more investable.
- Incorporate criteria that preferences investment that enables industrial demand flexibility and energy efficiency to support the transformation of the energy system and improve outcomes for consumers and the economy, enhance grid reliability and reduce the expansion of electricity generation and transmission infrastructure.
- Use the tools within the Sustainable Finance Roadmap as part of assessments (including climate-related financial disclosures and the sustainable finance taxonomy) and expect their use by beneficiaries beyond the current minimum statutory requirements.
- Expect Net Zero Fund beneficiaries to submit a credible transition plan consistent with Australia’s national net zero targets and commitments to the Paris Agreement.
- Design the Net Zero Fund to underpin an industrial decarbonisation approach that will support Australia in becoming a ‘renewable energy superpower’, including by considering how clustering investment can increase impact and by aligning investments with ‘regional ISPs’.
- Incorporate criteria that preferences investment that enables industrial demand flexibility and energy efficiency to improve outcomes for consumers and the economy, enhance grid reliability and reduce the expansion of electricity generation and transmission infrastructure.
- Deploy investment in hard-to-electrify and economically strategic sectors that require alternative feedstock and/or energy sources (e.g. green hydrogen and its derivatives) to enable Australia to capitalise on economic opportunities from low-carbon exports.
More details on these recommendations can be found in the submission [PDF 0.4mb].