Achieving emissions reductions of 60% on 2005 levels will require more than $400 billion in new public and private investment, McKinsey finds.
The Climate Capital Forum report, Getting Capital Moving: Three Big Ideas to Align Finance for Australia’s Net Zero Economy, outlines three practical proposals to mobilise that capital via reforms to superannuation, fuel tax credits and public investment vehicles.
1. Enable Super funds to invest in the net zero economy
Australians expect their retirement savings to be invested responsibly – some 68% believing their investments can impact climate change, 79% want their super fund to commit to reducing emissions, and 88% expect ethical investment of their savings (RIAA 2024).
Yet the current Your Future, Your Super performance test benchmarks funds against outdated, carbon-heavy indices, discouraging investment in low-carbon, future-focused industries. This limits the flow of capital into sectors critical to Australia’s net zero transition such as renewable energy, critical minerals, and clean manufacturing, despite members’ clear preferences and the growing financial risks of inaction.
The CCF is calling for the addition of optional climate-aligned benchmarks to the APRA performance test, consistent with the Climateworks Centre model. These would allow super funds to measure performance against indices that reflect climate risk and opportunity, while maintaining transparency and accountability.
This targeted reform would enable funds to invest confidently in climate-aligned industries without being discouraged by outdated tests, aligning fiduciary duty with long-term member value and national interest.
Redirecting even a fraction of Australia’s $4 trillion super pool toward the net zero transition supports all five pillars of the Treasurer’s productivity agenda and could unlock new jobs, boost productivity, and position Australia as a competitive, future-ready economy – a win for members, funds, company and the economy.
Aligning the super system with climate risk supports all five pillars of the Treasurer’s productivity agenda – dynamic economy; net-zero transformation; digital and regulatory reform; skills and inclusion; and sustainable finance.
“Right now, over 70% of clean energy investment in Australia comes from overseas. That makes us more vulnerable to global shifts and creates a structural weakness in our own economy. Local superannuation funds are better invested in renewables overseas than they are here at home, and that’s largely because the current performance test ties their hands. By benchmarking funds against high-emitting assets, it penalises those who want to invest in low-carbon industries and local energy projects.”
– Richie Merzian, CEO of the Clean Energy Investor Group
“Right now, too many high-quality carbon and natural capital projects in Australia are stuck. These aren’t fringe ideas, they offer real commercial returns and measurable environmental outcomes, but they’re unable to secure investment because our superannuation settings simply don’t allow it. Ironically, I see global pension funds investing in these same projects in Australia, while local super funds are effectively locked out.”
– Izzy Jensen, Transition Accelerator
2. Reform Fuel Tax Credits to Support Electrification
The CCF’s second proposal is a reform of one of Australia’s largest subsidy programs – the Fuel Tax Credit Scheme – to better align with its climate and productivity goals.
Major mining companies have received almost $60 billion in diesel fuel tax credits over the past two decades, with another $84 billion projected by 2030. The rebate, designed originally to offset road-use charges, now functions as a fossil fuel subsidy for off-road mining — discouraging electrification and reinforcing reliance on imported diesel.
Under the CCF’s proposal, a $50 million annual cap would apply per corporate group, affecting roughly 15 of the largest miners, including BHP and Rio Tinto. Any rebate above that cap could be reclaimed only if reinvested in mining electrification and decarbonisation infrastructure such as heavy-vehicle charging and renewable power systems.
The CCF says the reform would be budget-neutral while driving substantial emissions cuts, clean-energy investment, and industrial productivity. Farmers and small businesses would remain exempt, while the largest mining firms would be incentivised to modernise operations and mobilise capital toward net-zero transition infrastructure.
Redirecting taxpayer funds toward electrification rather than diesel subsidies, would strengthen fiscal responsibility and support Australia’s commitments to phase out fossil fuel subsidies under the Safeguard Mechanism.
Analysis from Climate Energy Finance (CEF) shows that such a reform could cut emissions, boost productivity, and improve Australia’s trade balance by up to $50 billion per year.
“From my perspective, redirecting that budget this way would drive the greening of the mining industry – it gives real financial incentive for companies to electrify rather than cling to diesel (which currently accounts for roughly 17% of our national emissions). In short, reallocating fuel tax credits accelerates decarbonisation by funding the clean infrastructure that companies need.”
– Tim Buckley, Director at Climate Energy Finance
3. Accelerate the Release of Committed Public Funds
The CCF is also proposing reforms to accelerate how Australia deploys public capital for decarbonisation and industry transformation. Despite more than $76 billion in federal and $6 billion in state commitments since 2023, only around 20% of funds have been deployed.
As the Net Zero Economy Authority has noted, the risk and return settings of Australia’s specialist investment vehicles – including the Clean Energy Finance Corporation (CEFC), Australian Renewable Energy Agency (ARENA), Northern Australia Infrastructure Facility (NAIF), Export Finance Australia (EFA) and National Reconstruction Fund (NRF) – make many catalytic projects unattractive. In practice, this rewards low-risk, near-commercial projects and sidelines higher-impact proposals..
The CCF argues that the system’s overly cautious design, highlighted by the CEFC using just $8.4 million a year of its allowed $300 million concessional finance capacity, has slowed Australia’s industrial transition.
To unlock investment and productivity, the CCF proposes reforms to increase risk appetite and accelerate deployment across all government investment vehicles. This includes fast-tracking the remaining $14.4 billion in the National Reconstruction Fund, lowering expected returns for high-impact projects, and introducing grace periods for early-stage manufacturing and infrastructure. The CCF also recommends allowing equity stakes in strategic industries such as green steel, aluminium and critical minerals, and applying the Treasury’s National Interest Framework to align all public investments with national goals.
The proposal is designed to be fiscally responsible, using profit-sharing and concessional finance so the public can share in successful outcomes. With many funds, including Hydrogen Headstart, the Safeguard Transformation Stream, still at 0% allocation, the CCF says this reform would ensure Australia’s $80 billion in climate and clean-energy commitments are deployed faster and smarter to secure a competitive, net-zero economy.
“What I see every day is the cost of our system’s risk aversion. Governments have done the hard work of announcing big funds — tens of billions through the NRF, ARENA, CEFC and others — but the money isn’t flowing fast enough, and it’s not reaching the innovators who need it most.
“Early-stage founders face a structural ‘valley of death’. They win grants but then can’t find the required match funding to unlock them. Others are slowed by programs that are too complex, too slow, or designed for late-stage corporates rather than emerging innovators.
“If public investment vehicles took on a bigger risk appetite — offering non-matched, early-stage funding and faster approvals — we’d unleash a new generation of Australian clean-tech companies.”
– Kirk McDonald, New Energy Nexus
The Climate Capital Forum is a network of investors, climate finance experts, decarbonising companies and philanthropists who came together to provide policy advice on how Australia can lead the world in decarbonising, renewable energy and cleantech innovation.
The CCF offers support to all levels of government on how to build a strong future economy and long-term job opportunities, including showing where investment of public capital and updated policies will encourage private investors to join the effort to rapidly develop our renewable energy and climate sectors.