Powering the Regions Fund – Safeguard Transformation Stream Round 2

Purpose and Program Overview

The Powering the Regions Fund (PRF) – Safeguard Transformation Stream (STS) Round 2 is a Commonwealth grant opportunity designed to help trade-exposed industrial facilities reduce their onsite Scope 1 emissions. It is administered by the Business Grants Hub within the Department of Industry, Science and Resources, on behalf of the Department of Climate Change, Energy, the Environment and Water (DCCEEW), and forms part of the Australian Government’s broader Safeguard Mechanism reforms.

The Safeguard Transformation Stream is a $600 million program overall, with approximately $321 million available under Round 2, allocated from the 2025–26 to 2032–33 financial years. The program supports facilities to invest in equipment, infrastructure, and workforce upgrades that deliver measurable, structural reductions in direct emissions.

By supporting decarbonisation at trade-exposed facilities, the program aims to reduce the risk of carbon leakage — where businesses shift emissions-intensive production offshore in response to domestic climate policy — while contributing to Australia’s 2030, 2035, and 2050 emissions reduction targets.

Key Grant Details

• Grant amount: $500,000 to $50,000,000 per project
• Funding contribution: Up to 50% of eligible project expenditure
• Application status: Open, with rolling batch assessment
• Application close date: Round 2 closes 6 May 2027 at 5:00pm AEST, unless funding is fully committed earlier
• Eligible entities: Incorporated companies, companies limited by guarantee, and incorporated associations that own or operate an eligible facility
• Co-contribution: Mandatory cash co-contribution required (in-kind contributions are not accepted)
• Location: Australia-wide; shared infrastructure projects must be located in Regional Australia (any area outside a Greater Capital City, including Kwinana)

Priority Sectors

The program is technology-neutral and does not restrict funding to specific industries. It is open to any owner or operator of a trade-exposed facility covered by the Safeguard Mechanism, provided the facility is not a new or expanded coal or gas production facility. Applicants across manufacturing, resources processing, and other emissions-intensive, trade-exposed industries may apply, subject to meeting the eligibility criteria.

Funding Scope

• Minimum grant: $500,000
• Maximum grant: $50,000,000
• Funding rate: Up to 50% of eligible project expenditure, with the applicant responsible for the remaining costs
• Assessment batches:
  • Batch 1: 5 February 2026 – 5 May 2026 (closed)
  • Batch 2: 6 May 2026 – 5 November 2026 (currently open)
  • Batch 3: 6 November 2026 – 6 May 2027
• Funding allocation by batch: Up to 50% of available funding is offered in Batch 1, with up to 25% offered in each of Batch 2 and Batch 3. Unallocated funds roll forward to the next batch.
• Project duration: Maximum project period of 60 months, with all projects required to be completed by 31 March 2033

Eligibility Criteria

• Must be the owner or operator of a trade-exposed facility covered by the Safeguard Mechanism
• Must hold an Australian Business Number (ABN)
• Must be one of the following entity types: a company incorporated in Australia, a company limited by guarantee, or an incorporated association
• New or expanded coal and gas facilities are not eligible (an existing facility must demonstrate it has not materially expanded, and does not plan to materially expand, production compared to pre-30 June 2023 levels)
• Employers of 100 or more staff must comply with the Workplace Gender Equality Act 2012
• Applicants (and project partners, where applicable) must not appear on the National Redress Scheme’s list of institutions that have not joined the Scheme
• Joint or consortia applications are permitted, provided a lead applicant is nominated to hold the grant agreement

Eligible Activities and Expenses

Eligible expenditure includes:

• Newly purchased or pre-existing plant and equipment
• Hired or leased plant
• Constructed plant and infrastructure
• Labour expenditure and associated on-costs
• Contract expenditure
• Staff training that directly supports project outcomes
• Decommissioning of old equipment
• Front-End Engineering and Design (FEED) studies, capped at 10% of total grant funding (up to $5 million) and only where annual turnover is $3 billion or less, and the study is linked to capital works within the project

Common project pathways include electrification of industrial processes, energy efficiency upgrades, renewable energy integration, and carbon capture and storage, provided the project reduces Scope 1 emissions at an eligible facility. Purchase of Australian Carbon Credit Units and other carbon crediting instruments is not eligible expenditure.

Assessment Process

The Safeguard Transformation Stream is a competitive grant program. Applications are first checked against eligibility criteria by the Business Grants Hub, then scored by the independent Powering the Regions Expert Advisory Panel against three weighted assessment criteria:

• Contribution to emissions reduction targets (2030, 2035, and 2050) – 50 points
• Capacity, capability, and resources to deliver the project – 10 points
• Impact of the grant funding on the project – 40 points

Applications within each batch are ranked against one another, with recommendations put to the Minister for Climate Change and Energy, who makes the final funding decision. Value for money, timing of emissions reductions, and geographic spread of projects are also considered.

Recent Program Updates

Round 2 introduces several changes from Round 1:

• Maximum project duration extended to 60 months, with a hard completion deadline of 31 March 2033
• FEED studies are now eligible expenditure, subject to the caps described above
• Updated definitions of “new or expanded” coal and gas facilities
• Applicants must identify the trade-exposed production variable at the lead facility
• The total attachment size limit has increased to 50MB

Application Tips

• Confirm the facility’s Safeguard Mechanism coverage and trade-exposed production variable before starting an application
• Prepare emissions abatement calculations early, including the basis for figures, as these carry the highest assessment weighting
• Gather supporting documentation such as board or CEO approval letters, independent accountant declarations, and letters of support from project partners
• Address every assessment criterion and sub-point in the guidelines, allocating effort in line with each criterion’s points weighting
• Align the proposal with the program’s objectives of emissions reduction, carbon leakage prevention, and workforce skills development
• Submit well ahead of the batch closing date, as late applications cannot be accepted under any circumstances

Where to Get Help

Consider consulting a grant specialist like Pattens Group for a personalised eligibility assessment and expert assistance in preparing a strong, compliant and competitive application. 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, application details, templates, and further information, visit the official website of the Powering the Regions Fund – Safeguard Transformation Stream Round 2 and other associated Australian government websites.