Alexandra McIntosh
Director, Business Development & Transactions
Australian Renewable Energy Agency
GPO Box 643, Canberra ACT 2601, Australia
Dear Alex,
Re: Future Made in Australia Innovation Fund – Program design and consultation
The Australian Hydrogen Council (AHC) welcomes the opportunity to provide insights to the consultation process of designing the Future Made in Australia Innovation Fund.
The AHC is the peak body for the hydrogen industry and our membership includes companies from across the value chain. Our members are at the forefront of Australia’s hydrogen industry, developing the technology, skills and partnerships necessary to ensure that hydrogen and its derivatives such as ammonia and methanol play a meaningful role in decarbonising Australian industry.
The Future Made in Australia (FMIA) Innovation Fund was announced out of the 2024-25 Australian federal budget as a key instrument to support the strategic industries under the FMIA agenda. The $1.5 billion of available grant funding has already been allocated into three of these industries (Priority Areas): $500 million for clean energy technology manufacturing, $750 million for green metals, and $250 million for low carbon liquid fuels. Hydrogen feeds into each of these Priority Areas, and this program is vital for the demand and deployment of our industry.
We note that defining priority areas under FMIA as industries of national significance should not only provide a means to prioritise ARENA funding but also kickstart an intention to show policy leadership and broader funding alignment to support these industries. This is what competing markets are doing, such as the UK Government matching the funding eligibility ratios of the Clean Maritime Demonstration Competition, where maritime is a high priority area under UK SHORE.[1] We would seek for ARENA’s work to explicitly be part of a broader FMIA framework of policy and financial support, working with other SIVs (as discussed below), and also a range of departments and the Net Zero Economy Agency.
From our preliminary conversations with ARENA as part of this consultation, the AHC is confident in the early design of the Innovation Fund and is supportive of this being established. We take this opportunity to formalise our comments with regard to further design and implementation stages for the Innovation Fund, including how the fund can work with and integrate into the existing funding ecosystem.
Maximising the value of government support
Before commenting on the Innovation Fund itself, it is timely to review the complex funding ecosystem that it is joining.
There are numerous funding programs and specialist investment vehicles (SIVs) for clean technologies and renewable energy in Australia. Each of these funding sources has unique objectives which often overlap. The funds do not, however, coordinate or hand over eligible projects between funding programs or between assessment stages. This translates to the same project or technology often needing to start again with each party, going through multiple lengthy application processes which consumes significant resources. For smaller organisations with limited resources, this hurdle can be enough to not apply, potentially restricting the speed to market. We note that this even occurs for different programs managed within the same organisation.
Whilst this issue is broader than ARENA alone, with the growing complexity of the funding environment, there is a need for increased collaboration and cohesion, not only to minimise duplication and administrative burden on applicants but also for these SIVs themselves.
With a re-elected federal government focused on the National Interest Framework under the FMIA, this is an opportune moment to suggest that reform is required. This might commence with a targeted audit of all SIVs and their programs to find solutions to inefficiencies and duplication, and maximise the value of government funding. In our view, the Australian Government should work to develop a ‘touch once, use many times’ model that guides applicants through this complex environment. The model would wrap around each technology or project, big or small, and provide a case management approach that stewards businesses through the eligible programs, so as to safeguard and incubate Australian innovation.
We would be pleased to work with the Australian Government, ARENA and other SIVs to unpack how this system is working in practice and provide options for case management approaches, such as through an extended front door for investors service or a whole-of-government Investment Committee for clean technologies and renewable energy programs. The AHC is also currently exploring the options with our members.
The purpose and strategy of the Fund: innovation, but especially deployment
Limited information has been publicly provided on the design of the Innovation Fund, but from reading a range of government sources, we can see this is capital grant funding to support pre-commercial innovation, pilot program and demonstration projects, early stage development, and deployment of innovative technologies and facilities.
Noting that the technical arrangements for the Innovation Fund have not been publicly consulted on, and an intended approach has not been formally proposed, the available information illustrates a very wide proposed scope. While the Innovation Fund is the largest that ARENA has managed, once broken up into the Priority Areas, this funding will need to be strategically targeted to ensure that it has the highest impact on commercialisation.
We were pleased to see that ARENA aims to divide the Priority Areas into two streams: innovation and deployment. AHC is very supportive of this, as it shows the strategic direction of the funding. We understand that the industry feedback provided through the Innovation Fund consultation survey showed a preference for capital allocation towards deployment, and we concur. While innovation is integral to the continued development of solutions to address climate change, we encourage a focus on funding allocation towards deployment and the progressing of solutions.
Designing the Innovation Fund to encourage transparency and accessibility
The AHC understands the critical nature of incubating the innovation and commercialisation of Australian technologies and processes, especially under a Future Made in Australia agenda. We must celebrate Australia’s previous commercialisation success and more importantly learn from where Australia didn’t maximise our nation building opportunity. Prime Minister Albanese recently highlighted the lost opportunity from the PERC solar cell.[2] It was first invented at UNSW in 1983 and today powers more than 85% of all new solar panel modules all over the world. Yet there is negligible solar cell manufacturing in Australia.
The establishment of this substantial and strategic fund is an opportunity to learn from domestic and international lessons, avoiding unnecessary delays, perverse outcomes or general disengagement. As each of the Priority Areas are still in evolving stages of development, it is important to allow for flexibility and commit to periodic reviews to calibrate to the movement of each industry.
We have collated some insights and recommendations below[3] as ARENA looks to design the Innovation Fund, with an aim of reducing bottlenecks, encouraging participation across all applicant sizes, and maximising benefits.
These insights include (but are not limited to) the need for ARENA to:
- Develop and socialise clearly articulated definitions, such as for eligible carbon sources. Eligible and sustainable sources of carbon dioxide under the Innovation Fund will need to be clearly defined for the production of low carbon liquid fuels, with particular consideration of post combustion capture. We note the narrow definition of eligible carbon sources in the UK has led to perverse outcomes.[4]
- Simplify application processes. Many of the funding rounds (e.g. ARENA’s Advancing Renewables Program) are open to businesses of all sizes, from Australian startups with less than five staff, to global corporates with significant government relations resources. Member feedback suggests that smaller companies are often disadvantaged, as the application process seeks the same level of detail on the company and technology. We hear that companies balance the resources (hours and dollars) required to apply with the probability of winning the grant, and as a result of perceived onerous application processes they are often choosing to not apply.
- Commit to shorter timelines and a fast-fail approach. Grant application processes should be shortened, with transparent timelinewindow. To address this, ARENA should commit to a fast-fail mechanism within a 4-6 week period of submission. This should limit delays and uncertainty while still retaining (or even boosting) communication and collaboration with ARENA. This would also require a commitment to providing feedback and next steps to unsuccessful applications. In a multi-stage process, a fast-fail and feedback approach should be provided at each stage.
- Increase leverage ratio of grants from 50% to 70% for early stage innovation. For early stage TRL innovations, the dollar-matching finance approach utilised by funding programs has still proven too difficult for first-of-a-kind projects, which struggle to attract project financing from traditional sources of investment and lending. Quite often for clean energy projects, ARENA is the only source of funding that they can access. Without amending ARENA’s funding approach and increasing risk appetite, Australia will lock out many clean energy innovations. The current system assumes that the innovation has spun out of a university or backed by a major corporation, with dedicated capital to support. Some of the ways that ARENA could address this imbalance is by loosening some of the grant requirements, increasing leverage ratios from 50% to 70% for early-stage innovation, and/or opening dedicated SME windows for grants.
Uncertain compliance with community benefit principles
As the Innovation Fund is under the FMIA umbrella, applicants must comply with the Community Benefit Principles (CBPs). Yet it is not at all clear how this will work in practice. With ARENA anticipating to open up the Innovation Fund for applications as early as July 2025, the uncertainty regarding the CBPs remains a significant risk that may limit industry engagement with the fund.
We are supportive of the CBPs and their role in guiding decision makers on how FMIA outcomes would benefit the community. We note that delivery on the intent is likely to differ across Australia given the diversity of communities that will benefit, differences in opinion about how communities would like to benefit, and the maturity of different sectors covered by the FMIA. There will be a balance required so that processes for demonstrating benefit do not stifle the innovation the funding was intended to support.
Given the role of the CBPs within the Innovation Fund process, we make the following suggestions:
- Do not let the design of the CBPs delay the implementation of the Innovation Fund. Noting that the implementation of the CBPs has not yet been publicly consulted on, this could be a lengthy process, delaying much needed deployment through this grant. Clear timelines for the consultation and subsequent enactment are required, and the Australian Government could consider an interim, flexible arrangement until the CBPs can be finalised.
- Consolidate reporting where reasonable. Many of the CBPs align with existing reporting requirements across the Australian jurisdictions, leading to a potential duplication of comprehensive processes. To avoid unnecessary administrative burden, the FMIA plans (that capture an applicant’s approach to address the CBPs) should recognise appropriate reporting already completed in a government process. There is also an opportunity for the Australian Government to more broadly consolidate the duplicative reporting ecosystem that relies on manual exemptions when a similar process has already been completed.
- Incorporate an element of proportionality. How the CBPs are operationalised should be proportional to the applicant’s resources and capabilities. That is, any methodologies and criteria that are to be formalised under the CBP Rules should not mandate a process or target that may not be reasonable in some contexts. A one-size-fits-all approach would not be appropriate for the variety of applicants under FMIA funding programs, such as short-term projects or SMEs versus established industries or larger corporates.
- Guarantee consistency over time to reduce risk. The CBPs will impact a variety of different government programs across many years, and it is logical to anticipate that the focus of these principles could shift over time. If the CBPs are amended in future, we ask that this impacts subsequent government funding rounds and does not throw into question the eligibility of funding already awarded. This consistency will alleviate investor uncertainty. Similarly, a FMIA plan that does not achieve its intended targets should be reviewed rather than requiring a clawback mechanism.
Ahead of formal consultation on the CBPs, AHC is developing recommendations for how this could be fairly operationalised. Given our existing work in this space, and the diversity and expertise of our membership, we offer the Australian Government a platform to test and design the CBP Rules with the AHC.
Recommendation 1
The Australian Government should conduct a targeted audit of the clean technologies and renewable energy programs and specialist investment vehicles to identify inefficiencies and duplication, and opportunities for a wrap around, case management approach that stewards applicants through the funding ecosystem.
Recommendation 2
The Australian Government should review and amend the design of ARENA grant programs, including the Innovation Fund, to remove bottlenecks and maximise opportunities. This includes:
• Developing clearly articulated definitions, such as for eligible carbon sources.
• Simplifying application processes.
• Committing to shorter timelines and a fast-fail approach.
• Reviewing ARENA’s funding approach, such as loosening some of the grant requirements, increasing leverage ratios from 50% to 70% for early stage innovation, and/or opening dedicated SME windows for grants.
Recommendation 3
The Australian Government should ensure that the design of the Community Benefit Principles:
• Does not delay FMIA funding.
• Recognises and consolidates reporting requirements, where reasonable.
• Includes an element of proportionality to not stifle innovation.
• Provides certainty that eligibility will not be retracted based on future amendments.
The AHC is keen to see the launch of the FMIA Innovation Fund and the commercialisation opportunities that it will foster. We welcome the opportunity to engage with its development and look forward to more of the FMIA ecosystem slotting into place, providing efficiencies and wrap around support for Australian innovation.
If you wish to discuss any element of this submission in further detail, please contact me at [email protected].
Kind Regards,
Natasha Cerexhe
Policy Manager
Australian Hydrogen Council
You can download the full PDF here.
[1] Innovation Funding Service (2025) Clean Maritime Demonstration Competition 6: Smart Shipping, UK Government, https://apply-for-innovation-funding.service.gov.uk/competition/2120/overview/d5dd7bfe-a341-44e7-9248-8c5885b4b1af#eligibility.
[2] Albanese, A. (2025) Doorstop interview – Whyalla, Australian Government, speech, 20 February, https://www.pm.gov.au/media/doorstop-interview-whyalla-0
[3] Also recommended more broadly here: AHC (2025) Re: Strategic examination of Australia’s R&D system, submission, 11 April, https://aidc.org.au/wp-content/uploads/2025/04/250411-AHC-submission-Strategic-Examination-of-RD-.pdf.
[4] Kaminski, I. (2024) ‘Anger over ‘bonkers’ UK plan to reach net zero by importing wood to burn’, The Guardian, 9 October, https://www.theguardian.com/environment/2024/oct/09/anger-uk-plan-net-zero-import-biomass-fuel-north-korea.