Net Zero Fund: National Reconstruction Fund Corporation

Purpose and Program Overview

The Net Zero Fund is a $5 billion sub-fund of the National Reconstruction Fund (NRF), established by the Australian Government to accelerate industrial decarbonisation and support the scale-up of domestic manufacturing of low emissions technologies. Delivered by the National Reconstruction Fund Corporation (NRFC), the Fund offers highly concessional finance to assist energy-intensive businesses in transitioning to less carbon-intensive manufacturing and production processes. Its capital is drawn from the NRF’s existing $15 billion allocation and replaces the previous $3 billion target for the renewables and low emissions technologies priority area.

The Fund is designed to support large-scale industrial facilities in decarbonising their operations, improving energy efficiency, and transitioning towards net zero. It operates under the Industry Sector Plan, which identifies the subsectors representing the greatest opportunity and need for decarbonisation, including those most impacted by the broader economic transition. Unlike conventional commercial finance, the Net Zero Fund targets a rate of return set at the five-year Australian Government bond rate minus 1%, enabling it to take on more risk than the private sector and attract co-investment from private capital.

The Net Zero Fund became open to applications in April 2026, with full implementation expected by mid-2026. It forms part of the Australian Government’s broader framework – including the Future Made in Australia initiative to strengthen sovereign industrial capability, lower industrial energy costs, support regional employment, and contribute to Australia’s commitment to economy-wide net zero emissions by 2050.

Key Grant Details

• Funding pool: $5 billion (drawn from the $15 billion NRF allocation)
• Type of support: Concessional finance in the form of debt (loans), equity investment, and loan guarantees — not grants
• Applications: Open (as of April 2026); the Fund is now accepting proposals
• Closing date: No fixed closing date published; the NRFC accepts investment proposals on an ongoing basis
• Eligible entities: Australian-based businesses and organisations operating in designated priority areas
• Co-contributions: Applicants must demonstrate an ability to generate a return (for equity investments) or to repay debt; private capital co-investment is strongly encouraged
• Geographic scope: Nationally applicable across all Australian states and territories; investment must be in entities that are solely or mainly Australian-based

Priority Sectors

The Net Zero Fund specifically targets the following sectors and subsectors, as identified through the Industry Sector Plan:

• Hard-to-abate industrial sectors, including iron and steel, aluminium and alumina, cement, and chemicals manufacturing
• Energy-intensive manufacturing facilities seeking to decarbonise, electrify, or improve energy efficiency
• Domestic manufacturing of low emissions technologies, including:
  • Wind turbine components
  • Solar panels and related components
  • Battery storage and energy storage solutions
  • Hydrogen electrolysers
  • Low-carbon liquid fuels
• Clean energy supply chain manufacturers, supporting Australia’s broader renewable energy build-out

The Fund also supports businesses operating across the NRF’s seven legislated priority areas: renewables and low emissions technologies; enabling capabilities; defence capability; transport; value-add in resources; value-add in agriculture, forestry and fisheries; and medical science — provided the proposed investment aligns with Net Zero Fund objectives.

Funding Scope

Investment instruments available:

• Concessional debt (loans): Direct loans at below-commercial rates, targeting a return of the five-year Australian Government bond rate minus 1%
• Equity investment: Available where all of the applicant entity’s activities qualify as constitutionally-supported activities under the NRFC Act
• Loan guarantees: Available to constitutional corporations and eligible entities to facilitate project finance

Investment size: No publicly specified minimum or maximum per transaction; investment terms are tailored to the needs of each proposal and negotiated directly with the NRFC.

Project timeline: Investment terms are determined on a case-by-case basis in accordance with the nature of the project. The NRFC can invest in early-stage start-ups, growth-stage companies, and mature businesses.

Rate of return target: 5-year Australian Government bond rate minus 1% (more concessional than the NRFC’s general portfolio, which targets the bond rate plus 2–3%).

Eligibility Criteria

To be considered for Net Zero Fund investment, proposals must meet the following requirements:

• The applicant entity must be solely or mainly Australian-based
• The proposed investment must align with one of the seven NRF priority areas and be consistent with Net Zero Fund objectives
• For debt and guarantees: the applicant must be a constitutional corporation (registered under the Corporations Act 2001) or an individual or entity where the investment would support a constitutionally-supported activity under Section 5 of the NRFC Act
• For equity investments, all of the entity’s activities must constitute constitutionally-supported activities under the NRFC Act; entities where only part of the business qualifies are ineligible for equity
• The proposal must demonstrate a risk/return profile consistent with the NRFC’s Investment Mandate
• The applicant must demonstrate the ability to repay debt or generate a return on equity
• The proposal must have regard to the NRFC’s legislated public policy outcomes
• An Australian Industry Participation Plan must be provided where required by applicable legislation
• The proposal must not constitute a prohibited investment, which includes coal or natural gas extraction, construction of pipeline infrastructure for natural gas extraction, and native forest logging

Eligible Activities and Expenses

The Net Zero Fund supports investment in activities that reduce industrial emissions, lower energy costs, and scale up low emissions manufacturing, including:

• Industrial decarbonisation capital works: Equipment upgrades, retrofitting, and process modifications at large-scale industrial facilities
• Electrification projects: Replacing fossil fuel-based industrial processes with electric equivalents, including electric boilers, heat pumps, and electric arc furnace technologies for steel
• Energy efficiency improvements: Upgrading plant, equipment, and operations to reduce energy intensity and costs
• Fuel switching: Transition to alternative fuels or inputs such as green hydrogen, low-carbon liquid fuels, and renewable gases where electrification is not yet viable
• Low emissions technology manufacturing: Scale-up of domestic manufacturing capacity for components and systems used in renewable energy generation, storage, and clean industrial processes
• New manufacturing investment: Establishment or expansion of facilities manufacturing low-emissions technologies, including wind turbines, solar panels, battery systems, and hydrogen electrolysers
• Clean energy supply chain development: Strengthening domestic supply chains for low-emissions technology inputs

The NRFC cannot provide grants; all support is in the form of repayable financial instruments (loans, equity, guarantees).

Assessment Process

Investment-based, not grant-based: The Net Zero Fund operates as an investment vehicle. Applications are assessed as investment proposals by the NRFC, rather than through a competitive grant application process.

Assessment approach: The NRFC employs a six-step investment process described as transparent, repeatable, and scalable. Proposals that meet minimum eligibility criteria proceed to due diligence.

Key assessment factors include:

• Strategic alignment with the Net Zero Fund’s objectives and the Industry Sector Plan
• Alignment with one or more of the seven NRF priority areas
• Risk/return profile and consistency with the NRFC Investment Mandate
• Demonstrated ability to repay debt or generate a return (for equity)
• Contribution to legislated public policy outcomes, including decarbonisation, job creation, and industrial capability
• Additionality: whether the investment addresses market failure or a gap not adequately served by private finance
• Potential to crowd in private capital
• Australian Industry Participation and sovereign capability considerations

Proposals that meet eligibility and pass initial screening proceed to commercial and technical due diligence prior to a final investment decision.

Recent Program Updates

• April 2026: The Net Zero Fund was declared open alongside the $1 billion Economic Resilience Program and the $150 million Forestry Growth Fund, with the Australian Government fast-tracking $6.15 billion in NRF sub-fund investments to support Australian industry.
• February 2026: The NRFC confirmed the Net Zero Fund’s final design, including the concessional rate of return (bond rate minus 1%) and the dual focus on industrial decarbonisation and low emissions technology manufacturing.
• September 2025: The Net Zero Fund was publicly announced alongside the release of the Industry Sector Plan. An industry consultation process was launched, receiving over 120 written submissions from manufacturing, energy, research, and industry body stakeholders. An industry forum attended by more than 60 executive-level representatives was also convened.
• Legislative context: The Fund operates under the National Reconstruction Fund Corporation Act 2023 and the National Reconstruction Fund Corporation (Priority Areas) Declaration 2023. The NRFC’s April 2026 Statement of Expectations sets updated strategic direction for the Corporation’s investment activities.
• Replacement of prior target: The Net Zero Fund replaces the previous NRF target of up to $3 billion for investment in the renewables and low emissions technologies priority area, significantly increasing the capital available for this space.

Application Tips

Businesses and organisations considering a Net Zero Fund investment proposal are encouraged to note the following:

• Review eligibility thoroughly before lodging an expression of interest. The Fund’s eligibility requirements under the NRFC Act are specific, particularly regarding entity structure for equity investments. Legal and financial advice is recommended before submitting.
• Prepare a clear investment thesis. The NRFC assesses proposals as an investor. Applicants should present a credible business case demonstrating the financial viability of the project, the anticipated emissions reduction impact, and the rationale for concessional support.
• Demonstrate alignment with the Industry Sector Plan. The strongest proposals will identify specifically how the project supports the sub-sectors and decarbonisation pathways identified in the government’s Industry Sector Plan.
• Quantify co-investment and private capital. The Fund is designed to crowd in private investment. Applicants should clearly articulate the extent of private sector co-funding and the role of NRFC finance in enabling the project.
• Address market failure. Applicants should explain why the project cannot proceed on commercial terms alone, and how NRFC concessional finance provides additionality.
• Engage early. The NRFC encourages proponents to contact the Corporation directly before submitting a formal proposal. Early engagement can help clarify eligibility and inform proposal development.
• Ensure corporate documentation is current. This includes company registration, ABN, corporate governance documentation, financial statements, and any required Australian Industry Participation Plan.

Where to Get Help

Navigating a National Reconstruction Fund investment proposal requires a thorough understanding of both the commercial and policy dimensions of the NRFC’s assessment process. Consider consulting a grant and finance specialist like Pattens Group for a personalised eligibility assessment and expert assistance in preparing a strong, compliant, and competitive proposal. Contact us today and get connected with Australia’s best grant specialist, boasting over 35 years of experience in the industry and a 100% success rate. For official guidelines, investment guidance, application details, and further information, visit the official website of the Net Zero Fund at www.nrf.gov.au/what-we-do/investment-sub-funds/net-zero-fund and other associated Australian Government websites, including the Department of Industry, Science and Resources at www.industry.gov.au.