Future Made in Australia Innovation Fund

The Government has provided additional detail about the $1.5 billion in grant funding to be administered through the Australian Renewable Energy Agency (ARENA) via the Future Made in Australia (FMIA) Innovation Fund. This grant funding is part of the $22.7 billion FMIA agenda and was announced as part of the Federal Budget 2024. Since the Federal Budget 2024, there has been limited information available regarding what the grant funding would look like. However, announcements made prior to the Federal Budget 2025 have provided some clarity in this regard. Specifically, the $1.5 billion in funding will be used to support pre-commercial innovation and the demonstration and deployment of renewable energy and low emissions technologies to support the transition to a net zero economy.

Grant funding will be split into the following:

• $750 million to Green Metals (e.g. iron, steel, alumina and aluminium)
• $500 million to Clean Energy Technology Manufacturing, with a specific focus on enabling the development of technologies able to alleviate supply chain challenges associated with the clean energy transition
• $250 million to Low Carbon Liquid Fuels (e.g. sustainable aviation fuels and renewable diesel).

Targeted consultation will take place through March and April 2025, with an anticipated opening date for applications in the latter half of the year.

What is Future Made in Australia?

Initially announced as part of the Federal Budget 2024, the $22.7 billion FMIA agenda is the Government’s response to international subsidy regimes like the US Inflation Reduction Act and similar international initiatives. It is intended to incentivise advanced manufacturing and clean energy projects within Australia and aims to boost Australia's strategic manufacturing capabilities across renewable hydrogen, critical minerals, green metals, low carbon liquid fuels and clean energy manufacturing.

Since the Federal Budget 2024, the Government has made progress with the program, with the hallmark of FMIA, the Future Made in Australia (Production Tax Credits and Other Measures) Act 2024 (the Production Act) passing Parliament in February 2025.This legislation provides production incentives to critical minerals and hydrogen producers that can be accessed from 1 July 2027.

Where does this new announcement fit in?

The FMIA Innovation Fund introduces a focused layer to the broader FMIA strategy. While the program continues to grow, with more information provided with each passing Federal Budget, questions remain around whether a sector-specific (i.e. ‘clean energy’) approach is the most effective way to stimulate long-term innovation amid times of economic complexity.

Furthermore, the provision of funding is stipulated to have regard for the Community Benefit Principles within the program. This is similar to the Production Act, with the provision of tax offsets able to be reduced in cases of non-compliance with such principles. However, notably, these Community Benefit Principles have not yet been designed nor released.

Other related announcements

The Federal Budget 2025 also saw funding of $2 billion over 19 years from 2024-25 directed to Green Aluminium Production Credits to provide production-based grants to support aluminium smelters switch to renewable electricity, as well as confirmation of the establishment of the $1 billion Green Iron Fund.

Both measures further cement the Government’s focus on clean energy. Notably, up to $500 million of funding under the Green Iron Fund will be available to support the Whyalla steelworks transformation, with remaining monies open to applicants across Australia.