Federal Budget 2026-27: Energy & Resources

The cornerstone of the Government's energy and resources measures is the $11.9 billion National Fuel Security Plan, which includes the establishment of a Fuel and Fertiliser Security Facility (up to AUD7.5 billion) and a $3.2 billion Australian Fuel Security Reserve. Beyond fuel security, the Budget redirects $2.2 billion in savings from renewable energy programs (including Hydrogen Headstart and the Battery Breakthrough Initiative), introduces a Domestic Gas Reservation Mechanism set at the equivalent of 20 per cent of exports, provides $173.3 million to support Australia's critical minerals industry, and allocates over $1 billion (including forward estimates) to support heavy industry including green aluminium and steelmaking. The measures also include significant funding to accelerate environmental and resources project approvals, and a temporary reduction in fuel excise estimated to decrease receipts by $3.8 billion.

Energy sovereignty – fuel security and resilience

• The Government will provide up to $11.9 billion over five years from 2025–26 to support Australian households, businesses and industry through the National Fuel Security Plan, including:
  • the establishment of a Fuel and Fertiliser Security Facility to increase additional supply and storage of fuel and fertiliser by providing up to USD5.0 billion (approximately AUD7.5 billion) in financial support including loans, equity, guarantees, insurance and price support
  • the establishment of a $3.2 billion Australian Fuel Security Reserve to increase long term fuel supply and storage in combination with an increase to the Minimum Stockholding Obligation (MSO), to increase Australia's fuel reserves to 50 days
  • the National Reconstruction Fund Corporation to deliver the $1.0 billion Economic Resilience Program from 2025–26 to support freight, fuel, fertiliser and other critical supply chains affected by global market disruptions
  • $55.0 million in 2026–27 to deliver the Transport Resilience and Capacity Kickstart pilot program to incentivise increased freight volumes by rail and maritime transport
  • $54.7 million over five years from 2025–26 (and $8.9 million per year ongoing) to support ongoing management of Australia's fuel security framework, including oversight of the Fuel Security Services Payment, the MSO and the National Fuel Security Plan communications campaign
  • $40.5 million in 2026–27 to accelerate the electrification of Australia Post's delivery fleet
  • $10.0 million over two years from 2026–27 for the Australian Energy Regulator to expand electricity market monitoring and reporting activities
  • $10.0 million in 2026–27 to support feasibility studies into new or expanded fuel refining capabilities, to be co‑funded with state and territory jurisdictions
  • $9.2 million over two years from 2025–26, terminating 31 December 2026, for the Department of the Prime Minister and Cabinet to establish a Fuel Supply Taskforce to coordinate Australia's fuel security during Middle East conflict‑related disruptions
  • $4.5 million over three years from 2026–27 for the Commonwealth Scientific and Industrial Research Organisation to maintain and enhance its Transport Network Strategic Investment Tool to model transport options to support resilience and enhance responses to disruption
  • $4.0 million over three years from 2026–27 to develop a green fuel bunkering strategy to support the Government's existing $1.1 billion Cleaner Fuels program, with costs to be met from within the existing resources of the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts
  • ongoing funding from 2025–26 for the Department of Industry, Science and Resources to maintain its industry and supply chain analytical platform to monitor supply chains
• The Government has also passed legislation to double the maximum penalties for major contraventions of the Competition and Consumer Act 2010 and the Australian Consumer Law from $50.0 million to $100.0 million, and tasked the Australian Competition and Consumer Commission (ACCC) to undertake weekly public reporting on fuel price movements and market conditions to deter harmful conduct in the fuel industry and supply chains during the Middle East conflict.
• The Government will also introduce legislation to streamline the ACCC's authorisation and class exemption powers to allow industry to coordinate under exceptional circumstances where it provides broader benefits.

Climate change, energy and environment – savings

• The Government will achieve savings of $2.2 billion over 14 years from 2025–26 by redirecting funding across the Climate Change, Energy, the Environment and Water portfolio. Savings include:
  • $1.3 billion over ten years from 2026–27 (and an average of $70.8 million per year from 2036–37 to 2038–39) from redirecting part of the $19.7 billion 2024–25 Budget measure titled Future Made in Australia – Making Australia a Renewable Energy Superpower, by reducing uncommitted funding under the Battery Breakthrough Initiative and Solar Sunshot programs and reducing funding available for Round 2 of Hydrogen Headstart to $1.0 billion
  • $164.4 million over three years from 2026–27 by reducing uncommitted funding under the Powering the Regions Fund from the non‑delivery of Australian Carbon Credit Units under Carbon Abatement Contracts in 2023–24 and 2024–25
  • $111.5 million over six years from 2025–26 by redirecting uncommitted grant funding in the Climate Change, Energy, the Environment and Water portfolio
  • $103.9 million over seven years from 2028–29 by returning uncommitted funding from the National Water Grid Fund
  • $93.8 million over two years from 2025–26 from reducing expected uncommitted funding under the Powering the Regions Fund – Critical Inputs to Clean Energy Industries Stream and the termination of a grant under the Stream from the 2023–24 Budget measure titled Powering the Regions Fund – final design
  • $78.6 million over four years from 2025–26 from reprioritising uncontracted funding under the Regional Hydrogen Hubs program, including from the 2022–23 October Budget measure titled Townsville Hydrogen Hub
  • $67.0 million over seven years from 2027–28 by returning uncommitted funding from the National Environmental Science program
• The savings will fund other Government policy priorities in the Climate Change, Energy, the Environment and Water portfolio, and the Industry, Science and Resources portfolio with respect to savings from the Battery Breakthrough Initiative.

Electric car discount – FBT

• The Government is adjusting settings of the electric car discount to maintain incentives for the shift to electric vehicles while transitioning to more sustainable settings for the longer term. Please see the Personal Tax and Corporate and International Tax sections above.

Industry, science and resources – savings

• The Government will achieve savings of $266.2 million over five years from 2025–26 (and an additional $1.9 billion from 2030–31 to 2042–43) by redirecting uncommitted grant funding in the Industry, Science and Resources portfolio. The savings from this measure will be reprioritised to other Government policy priorities in the Industry, Science and Resources portfolio.

Implementing environmental reforms

• The Government will provide funding to implement significant reforms to the Environment Protection and Biodiversity Conservation Act 1999, including the establishment of a National Environmental Protection Agency, including:
  • $36.9 million over two years from 2026–27 for the Department of Climate Change, Energy, the Environment and Water (DCCEEW) and the Clean Energy Regulator to continue administering the Nature Repair Market, and develop additional methods to increase investment in nature and facilitate delivery of environmental offsets
  • $28.0 million over two years from 2026–27 for DCCEEW and the Department of Agriculture, Fisheries and Forestry to work with impacted states to develop landscape‑scale approval pathways to allow existing forestry operations under Regional Forest Agreements to continue under the reformed environmental laws
  • $13.2 million over two years from 2026–27 for DCCEEW to establish the Restoration Contributions Holder to deliver environmental offsets on behalf of proponents
  • ongoing funding to establish the new National Environmental Protection Agency as a statutory agency from 1 July 2026, responsible for enforcing environmental laws, conducting audits, strengthening environmental protection and streamlining project approvals.
• The long‑term sustainability of the National Environmental Protection Agency will be further supported through improved cost recovery arrangements. The Government will commence a phased transition to new cost recovery arrangements, progressively increasing fees and introducing levies relating to environmental protection activities.

Supporting Australian industry

• The Government will provide funding to support Australia's heavy industry, including manufacturing. Funding includes:
  • $222.6 million over two years from 2025–26 to continue providing support and stabilisation to the Whyalla Steelworks during administration, including:
  • $215.9 million over two years from 2025–26 as the Commonwealth's co‑contribution to South Australia for the administration costs of the Whyalla Steelworks
  • $6.8 million in 2026–27 to continue the joint taskforce with the South Australian Government including through the provision of independent legal, commercial and probity advice to facilitate negotiations with potential buyers of the Whyalla Steelworks
  • $50.0 million in 2029–30 (and an additional $950.0 million from 2030–31 to 2039–40) to close the energy price gap for green aluminium at the Boyne Smelter
  • the Commonwealth's co‑contribution to support the workers of the Liberty Bell Bay manganese smelter during its administration.

Critical minerals investment

• The Government will provide $173.3 million over five years from 2025–26 to support growth of Australia's critical minerals industry. Funding includes:
  • $150.0 million over four years from 2026–27 for stockpiling of critical minerals
  • $20.4 million over two years from 2026–27 for the Department of Foreign Affairs and Trade and the Department of Industry, Science and Resources to support the operation of the Critical Minerals Strategic Reserve
  • $2.9 million over three years from 2025–26 to support delivery of Australia's international critical minerals commitments.
• Partial funding for this measure will be held in the Contingency Reserve until stockpiling opportunities are identified.

Accelerating energy and resources approvals

• The Government will provide funding to accelerate and streamline approvals processes and implement reforms to strengthen Australia's foreign investment framework, including:
  • $105.9 million over four years from 2026–27 for the Department of Climate Change, Energy, the Environment and Water (DCCEEW) and the National Environmental Protection Agency (NEPA) to modernise environmental information, data and digital systems (including through the use of artificial intelligence) to improve user experience and enable simpler, faster environmental approvals
  • $47.6 million over four years from 2026–27 to progress bilateral agreements with states and territories, to enable states to conduct assessments and approvals on the Commonwealth's behalf, to reduce duplication and ensure more efficient processing of environmental approvals
  • $26.4 million over four years from 2026–27 for DCCEEW and NEPA to work with states and territories to develop new bioregional plans and strategic assessments, which will fast‑track environmental approvals in priority areas including housing, critical minerals and renewable energy
  • funding to support states and territories to implement bioregional plans and strategic assessments in priority areas.

Consumer energy resources and bill savings

• The Government will provide $143.2 million over five years from 2025–26 (and $0.7 million in 2030–31) to maximise consumer and community benefits of the energy transition. Funding includes:
  • $97.2 million over five years from 2025–26 to continue implementing the National Consumer Energy Resources Roadmap to help consumers save on bills and benefit from the energy transition, including establishing a National Technical Regulator to develop, coordinate and streamline regulation of consumer energy resources
  • $15.9 million over four years from 2026–27 (and a $2.0 million equity injection in 2026–27) to uplift the Australian Energy Regulator to deliver energy consumers the best deal through network regulation, the Energy Made Easy website, implementation of the recommendations of the National Electricity Market wholesale market settings review and compliance and enforcement activities
  • reprofiling $15.4 million over four years from 2025–26 to expand the scope of the Dealership and Repairer Initiative for Vehicle Electrification Nationally program and extend the program by an additional year to better meet industry needs
  • $14.6 million over five years from 2025–26 (and $0.7 million in 2030–31) to maintain proportionate battery system inspections under the Cheaper Home Batteries program.
• The cost of this measure will be met from savings identified in the Climate Change, Energy, the Environment and Water portfolio.

Domestic gas reservation

• The Government will provide $35.5 million over four years from 2026–27 to ensure a secure and ongoing supply of affordable gas through the domestic wholesale gas market, including via the establishment of a Domestic Gas Reservation Mechanism. Funding includes:
  • $30.6 million over four years from 2026–27 to develop and implement the Domestic Gas Reservation Mechanism and for gas market analysis and policy development to support market reliability and energy security
  • $4.9 million in 2026–27 to modernise offshore resources regulation to support gas investment and help mitigate supply shortfalls, including providing more clarity on consultation requirements for offshore resources approvals.
• The domestic gas reservation percentage will be set at the equivalent to 20 per cent of exports. The Domestic Gas Reservation Mechanism will commence on 1 July 2027.
• The Government will also continue the policy and coordination functions of the Offshore Decommissioning Directorate.

National solar panel recycling pilot

• The Government has provided $24.7 million over three years from 2025–26 to deliver a national pilot for recycling solar panels and establish up to 100 pilot collection sites nationwide to reduce waste and reuse valuable minerals to support the energy transition.

Carbon crediting and emissions reporting

• The Government will provide $23.3 million in 2026–27 to strengthen the Government's climate capability and support emissions reduction activities. Funding includes:
  • $13.3 million in 2026–27 to maintain and strengthen the capability of Australia's National Greenhouse Accounts to deliver high‑quality emissions data and track progress against Australia's emissions reduction targets
  • $8.9 million in 2026–27 to boost method development and strengthen integrity under the Australian Carbon Credit Unit scheme
  • $1.0 million in 2026–27 to continue to build climate risk management capabilities and systems across the Australian Public Service.

Safe circular economy – continuing

• The Government will provide additional funding of $17.0 million in 2026–27 to continue delivery of the Government's circular economy policy, program and legislative functions.
• The cost of this measure will be partially met from savings identified in the Climate Change, Energy, the Environment and Water portfolio.

Foreign resident CGT – renewables concession

• The Government will provide a time‑limited, targeted concession in the foreign resident CGT regime for investment in the renewables sector as part of the implementation of the 2024–25 Budget measure Strengthening the foreign resident capital gains tax regime.
• The transitional arrangement will apply to foreign investors disposing of certain renewable energy infrastructure assets from commencement, being the first day of the next quarter after Royal Assent, until 30 June 2030.
• This concession balances ongoing Government support for Australia's practical action on climate change, with the need to ensure the tax treatment of these assets aligns with the treatment of other assets in the longer term.

Fuel excise and road user charge

• The Government has temporarily reduced the excise and excise‑equivalent customs duty rates (excise rates) applying to most fuel products and the road user charge for heavy vehicles, for 3 months from 1 April 2026.
• The excise rates have been reduced by a total of 60.9 per cent, equating to a 32 cent per litre reduction for petrol and diesel. States and territories have agreed to provide the Commonwealth up to $400 million to enable increased GST revenue to be returned through lower excise, which equates to 5.7 cents per litre of the cut for petrol and diesel. The road user charge for heavy vehicles has also been reduced from 32.4 cents per litre to zero.
• This measure is estimated to decrease receipts by $3.8 billion and decrease payments by $1.3 billion over the five years from 2025–26.