Regional businesses get $180m cash injection to decarbonise industrial base

Industrial electrification is accelerating and a new $180 million federal fund is expected to help smaller, regional businesses join the trend.

The third and final funding round in the Australian Renewable Energy Agency’s (ARENA) $400 million Industrial Transformation Stream (ITS) opened this week for regional companies. 

The aim is to support “innovative technologies that haven’t been tried before”, such as new methods to replace fossil fuels in high-temperature industrial processes such as chemical manufacturing.

But it will also help them into technologies that are already being used but have a high cost or risk barrier, such as electric heat pumps.

The fund comes at a time when a shift to electrify, or at the very least move away from gas, is accelerating, says Australian Alliance for Energy Productivity (A2EP) CEO Jarrod Leak.

“Three years ago we saw first movers go for electrification projects where all the stars lined up: high LPG / gas price, spare electrical capacity and a need to increase production,” he told Renew Economy.

“Nowadays the uptake is much broader and at a much higher pace to meet decarbonisation targets, reduce reliance on uncertain gas prices and reduce energy costs. 

“Businesses across most industries are moving on electrification; dairy, pharmaceuticals, beverages, chemical, ethanol, mineral processing, meat processing, all but the very high temperature processes for some building materials are moving to electrify.”

Leak says this round has a lower funding threshold of $500,000 rather than previous rounds with minimum funding of $1 million. 

He says this will open the fund up to support more modest electrification demonstration projects for companies wanting to test technologies which are new to them.

“We expect to see a wider cohort of applicants. It’s likely that this funding won’t last as long as round 1 and 2 despite it being a larger amount at $180 million,” he says. 

The first two rounds funded businesses’ initial push into emissions-free technologies and then the commercial rollout of these.

The latest funding will help regional companies that want to start the decarbonisation process but don’t know where to begin, said ARENA CEO Darren Miller in a statement.

“We know many businesses want to reduce emissions but aren’t sure where to start. This funding is designed to help them take that step,” he said.

“Whether you’re electrifying cold storage at a meat processing facility, implementing thermal energy storage technologies, or recovering biogas from dairy waste—if you are tackling emissions and energy use in an innovative and scalable way, we want to hear from you.”

Electrification technologies are a key part of the federal 2035 emissions target for industrial decarbonisation.

The federal government expects energy efficiency upgrades and electrification technologies to be widely deployed by 2035, and for “enablers” and alternative fuels such as green hydrogen to be scaling up at pace.

“Electrifying many industrial processes is a critical next step, allowing businesses to reduce emissions by using renewable electricity,” the industry plan to meet the 2035 emissions targets says.

“For processes that are unable to electrify now, scaled‑up alternative fuels and inputs like hydrogen and bioresources will become available.”

Green hydrogen is considered “critical” under this plan for decarbonising several industries.

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