How will Australia's new climate targets impact manufacturing?

On 18 September 2025, Prime Minister Anthony Albanese announced the country’s latest emissions target — for emissions to be reduced 62–70% (from the 2005 baseline) by 2035 in line with independent recommendations by the Climate Change Authority.

To achieve this target, the federal government has released additional spending, including a new $5 billion Net Zero Fund to be established within the National Reconstruction Fund to help industrial facilities decarbonise and scale up more renewables and low-emissions manufacturing.

Further funding includes:

• $2 billion for the Clean Energy Finance Corporation to continue to drive downwards pressure on electricity prices;
• $1.1 billion to encourage more production of clean fuels in Australia;
• $40 million to accelerate the rollout of kerbside and fast EV charging across Australian suburbs and regions;
• $85 million for frameworks and tools to help households and businesses understand and improve their energy performance;
• $50 million for sports clubs that focus on decarbonising and driving climate action.

The Australian Food and Grocery Council (AFGC) has welcomed the clarity provided by this announcement.

AFGC CEO Colm Maguire said the government’s plan sends a strong signal of support for the transformation of Australia’s essential food and grocery manufacturing sector, which employs more than 290,000 Australians and contributes over $170 billion to the economy.

“We welcome the government’s strengthened emissions reduction target, which provides a clear framework for long-term investment and innovation,” Maguire said. “Our industry is already taking steps to improve energy efficiency, reduce emissions and build resilience. This target gives us the clarity we need going forward.”

In a major win for the sector, the AFGC also applauds the expansion of the National Reconstruction Fund (NRF) to include an additional $5 billion for industrial decarbonisation and low-emissions manufacturing. An additional $85 million has also been announced to support businesses to understand and improve their energy usage.

“Changes to the National Reconstruction Fund have long been called for by the AFGC and this announcement is a win for Australian manufacturing, regional jobs and supply chain security. The funding has the potential to help food and grocery manufacturers invest in decarbonisation technologies and advanced manufacturing capabilities sooner to keep us competitive globally.”

The AFGC has long advocated for investment to modernise Australia’s largest manufacturing sector, and today’s announcements are a strong step forward.

As the third-largest industrial energy user in the country, the food and grocery sector faces a unique set of challenges in the energy transition.

Scope 3 emissions make up a significant share of the sector’s footprint, and addressing them requires strong value chain collaboration, something the AFGC and its members are committed to. To support this, the AFGC has developed a Scope 3 Emissions Workbook to help businesses measure, understand and reduce their emissions, because what gets measured can be reduced.

Image credit: iStock.com/Supatman