The Australian Government released the 2025 Federal Budget on Tuesday, 25 March 2025. For the renewable energy sector, the key takeaway is the government’s continued commitment to a ‘Future Made in Australia’ that aims to promote an Australian green metals industry as well as the flow of finance into renewable energy and clean energy technologies. The Budget also responds to the escalating economic impact of climate-related disasters and the rising cost of energy for Australian households and businesses.
Need to know
- $3 billion in funding for green metals production, strengthening Australia’s role in the global clean energy economy that is distributed as follows:
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- $2 billion for the Green Aluminium Production Credit to support Australian aluminium smelters to transition to renewable energy and maintain competitiveness; and
- $1 billion for the Green Iron Investment Fund to accelerate the development of the green iron industry to support low-emission steelmaking.
- $2 billion recapitalisation of the Clean Energy Finance Corporation (CEFC) to unlock further investment in renewables, energy efficiency, and low emissions technologies.
- Continued investment in the Future Made in Australia Innovation Fund, driving manufacturing and energy transformation with $750 million for green metals, $500 million for clean energy technology manufacturing, and $250 million for low carbon fuels.
- A new national investor “Front Door” to attract global capital and streamline major clean energy investments. For more information, please see the details below.
Investment in green metals and Australian projects
The government has committed $1.5 billion to the Future Made in Australia Innovation Fund, with current funding allocations including:
- $750 million for green metals development, supporting the decarbonisation of heavy industries;
- $500 million for clean energy technology manufacturing, enhancing domestic production capabilities; and
- $250 million for low carbon fuels, fostering innovation in sustainability energy solutions.
This allocation aligns with the broader $22.7 billion Future Made in Australia agenda, positioning Australians to benefit from the global transformation to cleaner and cheaper energy.
To further accelerate private sector investment, the government is establishing a new “Front Door” for domestic and global investors. This will offer a single-entry point for investors, helping them with navigating approval processes and coordinating major clean energy projects with facilitation services guided by an Investor Council from September 2025. Read more here.
Our articles ‘New Energy Insights: Bulletin – Future Made in Australia Bill 2024’ and ‘New Energy Bulletin: Guarantee of Origin legislation enacted – a milestone for clean energy certification’ provides further insights on the Government’s ‘Future Made in Australia’ agenda.
Green metals – advancing Australia’s industrial transition
The Budget allocates $3.2 billion over 19 years to support the future of Australia’s metals industry, building on the green industrial momentum since 2024. The funding includes:
- $2 billion over 19 years for the Green Aluminium Production Credits, designed to support aluminium smelters transition to renewable electricity before 2036; and
- $1 billion over seven years for the Green Iron Investment Fund, which will support iron producers to establish or transition into low emissions facilities in Australia. An amount of $500 million has been designated to the transformation of the Whyalla Steelworks in South Australia.
Additionally, $219.3 million will be provided over two years from 2024-25 to provide immediate on the ground support to Whyalla steelworks during administration.
Our article ‘New Energy Bulletin: New production credit scheme supports transition to green aluminium’ provides more information on the government’s support for renewable energy in the aluminium industry.
| For a detailed breakdown, click here and here. |
CEFC – renewed capital to accelerate the energy transition
The CEFC will be recapitalised with $2 billion, as part of the government’s broader strategy to meet its greenhouse gas emissions reduction targets. The government has committed to directing funds into critical areas that will drive the nation’s energy transition and build economic resilience, including the following areas:
- renewable energy, with a focus on financing the upgrade, expansion and modernisation of Australia’s electricity grid;
- low emissions and energy efficiency technologies;
- building industry capacity to support the green economy; and
- dissemination of information to industry stakeholders to promote innovation and collaboration.
The recapitalisation is expected to unlock $8 billion more in private co-investment, driving increased financial flows into Australia’s clean energy sector.
| For a detailed breakdown, click here and here. |
Climate resilience and disaster response
The Federal Government has provisioned $1.2 billion to fund recovery efforts for ex-Tropical Cyclone Alfred and other natural disasters. A total of $13.5 billion in funding for natural disasters is accounted for in this year’s budget.
Key initiatives include:
- up to 13 weeks of income support through the Disaster Recovery Allowance for affected individuals;
- $80.6 million to primary producers, small businesses, community facilities and non-profits after the North and Far North Queensland Tropical Low earlier this year;
- $15 million allocated to early recovery efforts after ex-Tropical Cyclone Alfred; and
- $200 million through the Disaster Ready Fund to support disaster resilience and risk reduction.
These investments reflect increasing cost of extreme weather events and the need to future-proof communities against escalating climate risks.
Energy Bill relief and consumer protection – inflation and cost of living response
The Federal Government has extended its energy bill relief measures with a further $1.8 billion commitment. Every household will receive $150 in rebates ($75 per quarter for the second half of 2025), with around one million small businesses also eligible. Read more.
The ACCC’s National Electricity Market Inquiry through the Australian Energy Regulator has been extended. Additional enforcement activities will be undertaken to ensure retail energy providers comply with consumer rights and pricing rules. [Treasury Speech subheading ‘New energy rebates’]
These measures are expected to provide immediate relief and reduce headline inflation. However, questions remain around their efficiency compared to long-term structural investments in electrification and grid modernisation.
The government’s continued commitment to a ‘Future Made in Australia’ is promising news for the clean energy industry – so where to from here? If you’d like to learn more about how the Federal Budget will affect your business, reach out to Matt Baumgurtel.
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.
