Budget 2025: $4.3 Billion for New Net Zero Measures Across Next 3 Years

The lion’s share of the funding will go toward reducing emissions in Australia’s energy system and the broader economy.

A general view of Australia's largest solar farm, the Western Downs Green Power Hub, in Chinchilla in Queensland, Australia on Jan. 17, 2025. Brook Mitchell/Getty Images

Labor’s new net zero initiatives will cost Australian taxpayers $4.3 billion (US$2.7 billion) in the short term and $6.9 billion in the medium term.

These figures follow the $24.3 billion net zero spending outlined in last year’s budget and $4.6 billion in climate-related spending from the previous year.

The lion’s share ($3.8 billion) of the short-term funding will be used to reduce emissions in Australia’s energy system and the broader economy (pdf).

Specifically, $2 billion will be earmarked for the Clean Energy Finance Corporation, also known as Australia’s government-owned “green bank,” to invest in renewable power and storage, energy efficiency, and other low-emissions technology.

Around $1.25 billion will be spent on the Rewiring the Nation program, which aims to “modernise” Australia’s electricity grid and make renewable energy more accessible to Australians by investing in new and upgraded grid infrastructures.

Another $499 million will be set aside for the expansion of the Social Housing Energy Performance Initiative and $40 million for measures to ensure a reliable and secure energy transition.

Regarding strengthening net zero industries and skills, the government will allocate $166 million to accelerate investment in Australian industries as part of the Future Made in Australia economic plan.

While the government did not reveal the short-term cost to support Australian-made metals, it was estimated that the measure would cost $1.98 billion in the medium term.

To make Australia more adaptable to climate change, the government will inject another $354 million into infrastructure projects that support flood resilience, including upgrades to Townson Road, Burdekin Road and Garfield Road West in New South Wales.

‘Green Bonds’ to Finance Climate Programs

The budget papers also revealed that the government had been using “green bonds” to finance a number of climate programs.

In June 2024, the Labor government issued the first Green Treasury Bond with an issuance value of $7 billion.

“The $7 billion issuance attracted strong demand with more than $22 billion in bids from 105 investor institutions, of which 17 were new to Australian Government syndicated issues,” the papers revealed.

The government allocated $2.5 billion of the funding to eligible projects in 2022–23, and $2.9 billion to eligible projects in 2023–24.

The remaining $1.6 billion is expected to be spent on projects in the coming years.

According to the government’s estimates, the funding had resulted in a range of climate and environmental outcomes, including 4,600 gigawatt-hours of renewable energy generation, 103.4 kilometres of new and upgraded electric rail track, and 5,564 hectares of improved and managed koala habitat.

Wind turbines can be seen in Albany, Western Australia, on Aug. 4, 2023. Susan Mortimer/The Epoch Times

Climate Change Group Supports New Funding

Climate Council, a non-profit organisation advocating for climate policies and solutions, expressed its support for the government’s new budget.

“These confirmed funding commitments for initiatives, like green metals, are welcome,” said Nicki Hutley, an economist at the Climate Council.

“From here, there are abundant opportunities for the federal government to grow Australia’s clean economy for generations to come through win-win solutions for our economy and climate.”

Pointing to the $1.8 billion electricity bill rebate outlined in the new budget, Hutley wanted the government to go further and come up with a more permanent solution to reduce electricity prices and carbon emissions at the same time.

“Smart investments where the best gains can be made–particularly energy efficiency and growing our renewable energy capacity–can help protect Australians from climate and financial shocks,” she said.

Australia Needs More Balanced Energy Mix: Shadow Minister

Meanwhile, Shadow Climate Change and Energy Minister Ted O'Brien said Australia needed a more balanced energy mix.

“We believe that instead of putting all the eggs in one basket with a renewable-only approach, we should have a balanced energy mix,” he told ABC News.

“That means renewables, plus gas, and coal [stations] retiring from the system should be replaced with zero-emission nuclear energy.”

The shadow minister also noted that the Coalition’s plan was to prioritise gas in the short term and nuclear energy in the long term.

Furthermore, he highlighted that the Coalition’s plan would deliver a net zero electricity grid at 44 percent cheaper than the Labor government’s.