20Net Zero Fund

20 Net Zero Fund

(1) The Corporation shall make available up to $5 billion for investments that are: (a) directed towards supporting either: (i) large industrial facilities to decarbonise, improve energy efficiency, and transition to net zero; or (ii) the scaling up of domestic manufacturing of renewables and low emissions technologies; and (b) for a purpose relating to a priority area of the Australian economy in subsections 6(5) or (8) of the National Reconstruction Fund Corporation (Priority Areas) Declaration 2026.

Note: The Net Zero Fund is intended to support investments in sectors that have the greatest opportunity and need for decarbonisation, those most impacted by the economy’s transition to a net zero economy, and where public investment is likely needed for the sector to make a significant contribution to emissions reduction at an efficient cost.

Benchmark return (2) The Corporation must target an average return of 1 per cent below the five‑year Australian government bond rate (according to the size and time of investing) as the benchmark return of investments made under the Net Zero Fund over the medium to long term. (3) The Corporation must measure performance against the benchmark in subsection (2) before deducting operating expenses. Risk level (4) In targeting the benchmark return under subsection (2), the Corporation: (a) must operate with a commercial approach, including by undertaking appropriate due diligence, credit and investment risk assessment processes; and (b) must seek to develop a portfolio of investments that is diversified and has, in aggregate, an acceptable level of risk, having regard to the terms of the Act and the objectives of the Net Zero Fund under subsection (1); and (c) may determine that the acceptable level of risk of the investments, including both the aggregate level of risk and the risk of individual investments, is higher than for the General Portfolio.

Note 1: Investments under the Net Zero Fund may increase the Corporation’s overall exposure to risk.

Note 2: This reflects the different risks of investments made under the Net Zero Fund compared to those under the General Portfolio, including concentration risks and regulatory risks.

(5) For subsection (4), the level of risk deemed acceptable by the Corporation may be higher than the risk tolerance of commercial banks and private sector investors, if this higher risk tolerance supports the objects of the Act and this instrument. (6) The Corporation must periodically review the Corporation’s investment and operational practices for the purposes of managing the risk of the Net Zero Fund over time.