Federal Budget 2025-2026: energy and climate snapshot

Though cost-of-living focused, the 2025-26 Federal Budget commits to some significant support to facilitate Australia’s renewable energy transition and invest in environmental protections. The Budget looks to build on the Future Made in Australia package announced last year to maximise Australia’s net zero opportunities.

We outline several important energy-related initiatives announced on Tuesday night, including wins for unlocking investment and finance for significant projects, developing emerging clean energy industries and committing to environmental protections. 

• $1.5 billion from within existing funds allocated to the Future Made in Australia Innovation Fund committed to priority sectors: $750 million to green metals, $500 million to clean energy technology manufacturing capabilities and $250 million to low carbon liquid fuels.
• A $2.0 billion expansion of the Clean Energy Finance Corporation to support the modernisation of Australia’s electricity grid and unlock $8.0 billion in additional investment in renewable energy, energy efficiency and low emissions technologies. In support of these measures, the Government also reiterated its commitment to the previously announced $36.9 million in funding to enhance existing grid infrastructure and the $10.0 million Accelerated Connections Fund, which aims to fast-track the connection of new projects to reduce grid bottlenecks.
• $3.0 billion to support green metals industries, with $2.0 billion for a Green Aluminium Production Credit, available from 2028-29 to support the transition of Australian aluminium smelters to renewable electricity. A further $1.0 billion is committed to the Green Iron Investment Fund, to accelerate manufacturing and supply chains and modernise local industries, with $500.0 million earmarked to transform the Whyalla Steelworks.
• The implementation of the Front Door initiative, which was announced as part of the 2024-25 Federal Budget, from September 2025. This initiative introduces a single-entry point for investors which streamlines global and domestic investment in major, transformational project proposals.  
• Support to transform Australia’s energy, manufacturing and construction workforces. This includes $50.0 million to support new and upgraded TAFE facilities, $30.0 million to support upskilling initiatives, and $10.0 million over three years from 2025-26 to establish a National Hydrogen Technology Skills Training Centre in Victoria.
• $212.0 million over four years from 2025-26 (and an additional $50.0 million in 2029-30) to protect Australia’s natural environment, including by reducing the use of pollutants and hazardous substances, in line with the Government’s commitment to protect 30 per cent of Australia’s landmass and territorial waters by 2030.
• $1.5 billion to support state environment, energy and water projects, including expanding the NSW Electricity Infrastructure Roadmap 2023 Round 2 – Firming Infrastructure Tender and supporting CarbonNet’s Stage 3 activities, which are focussed on establishing a commercial carbon capture and storage network in Victoria’s Gippsland Basin. 

These initiatives are backed by government agency resourcing. The Net Zero Economy Authority (established recently in December 2024), the Australian Renewable Energy Agency, the Clean Energy Finance Corporation, the Clean Energy Regulator and the Climate Change Authority each facilitate investment, foster community engagement and coordinate policies and programs to accelerate Australia’s pathway to net zero.

Missing from the announcements is any additional regulatory reform of federal environmental legislation or the carbon offsets regime. The Budget is also silent on any new initiatives to support the land-based port and transmission infrastructure required for the emerging offshore wind sector.