Federal Budget 2026-27: Environment / ESG / Future Made in Australia

The Budget introduces a range of measures across the Climate Change, Energy, the Environment and Water portfolio, headlined by $2.2 billion in savings over 14 years through the redirection of uncommitted funding from renewable energy and water programs. Key areas of investment include environmental law reform, particularly the establishment of a National Environmental Protection Agency and streamlined approvals processes, along with continued funding for biodiversity protection, Great Barrier Reef restoration, water reform and carbon crediting integrity.

Climate portfolio 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; and
  • $67.0 million over seven years from 2027–28 by returning uncommitted funding from the National Environmental Science program.
• The Government has already provided partial savings for this measure.
• 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.

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; and
  • 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.
• This measure builds on the 2023–24 Budget measure titled Nature Positive Plan – better for the environment, better for business and the 2024–25 Budget measures titled Nature Positive Plan – additional funding and Future Made in Australia – Strengthening Approvals Processes.

Accelerating environmental approvals

• The Government will provide funding to accelerate and streamline approvals processes and implement reforms to strengthen Australia's foreign investment framework, including:
  • The Government has legislated reforms to the Environment Protection and Biodiversity Conservation Act 1999. These reforms will reduce the delays for environmental approvals, which is estimated to save up to $6.9 billion a year in regulatory costs;
  • $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; and
  • funding to support states and territories to implement bioregional plans and strategic assessments in priority areas.
• The cost of this measure will be partially met from savings identified in the Climate Change, Energy, the Environment and Water portfolio, fees and existing resources of the Treasury and the ATO.
• This measure builds on the 2023–24 Budget measure titled Nature Positive Plan – better for the environment, better for business and the 2024–25 Budget measure titled Future Made in Australia – Strengthening Approvals Processes.

Protecting Australia’s native species

• The Government will provide additional funding of $110.8 million over two years from 2026–27 to continue activities to protect native species and Australia's biodiversity.
• Funding includes:
  • $99.6 million over two years from 2026–27 to support conservation and planning activities, including actions to slow the rate of environmental and native species decline, and aid recovery of Australia's native species and special landscapes; and
  • $11.2 million in 2026–27 to maintain critical preparedness against High Pathogenicity Avian Influenza (HPAI H5) incursions, including through initiatives that boost resilience of priority native wildlife across high‑risk locations.
• The cost of this measure will be partially met from savings identified in the Climate Change, Energy, the Environment and Water portfolio.
• The Treasury manages Commonwealth payments to the states and territories.
• This measure extends the 2022–23 October Budget measure titled Saving Native Species and the 2025–26 MYEFO measure titled Saving Native Species (Conservation Planning Component) – continuing funding, and builds on the 2024–25 MYEFO measure titled Supporting Australia's Avian Influenza Preparedness and Response.

Protecting the Great Barrier Reef

• The Government will provide $91.8 million over two years from 2026–27 to continue activities to protect and restore the Great Barrier Reef. Funding includes:
  • $86.8 million over two years from 2026–27 to continue reef protection activities, reef restoration projects and support implementation of the Reef 2050 Long‑term Sustainability Plan; and
  • $5.0 million in 2026–27 to continue reef monitoring, protection, and stewardship activities through the Tourism Reef Protection Initiative.
• The cost of this measure will be partially met from savings identified in the Climate Change, Energy, the Environment and Water portfolio.
• This measure extends the 2022–23 October Budget measures titled Reef 2050 Long‑term Sustainability Plan – implementation and Shovel Ready Catchment and Reef Restoration Projects, and the 2025 PEFO measure Additional Funding for the Tourism Reef Protection Initiative.

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; and
  • $8.9 million in 2026–27 to boost method development and strengthen integrity under the Australian Carbon Credit Unit scheme.
• The cost of this measure will be met from savings identified in the Climate Change, Energy, the Environment and Water portfolio.
• This measure builds on the 2022–23 October Budget measure titled Commonwealth Climate Risk and Opportunity Management Program, the 2023–24 Budget measure titled Capturing Australia's Emissions Reduction Data – additional funding, and the 2024–25 Budget measure titled Improving the Australian Carbon Credit Unit Scheme.

Water reform

• The Government will provide additional funding of $21.1 million over four years from 2026–27 (and $1.5 million per year ongoing) to continue water reform activities.
• Funding includes:
  • $6.8 million in 2026–27 to continue arrangements for First Nations people to own, access and manage water in Australia;
  • $3.9 million in 2026–27 to continue supporting the transparency, integrity and understanding of water markets, deliver key reforms and work with affected communities on the Murray‑Darling Basin (Basin) Plan; and
  • $3.9 million in 2026–27 to continue support for the hydrological modelling platform underpinning implementation of the Basin Plan.
• The cost of this measure will be partially met from savings identified in the Climate Change, Energy, the Environment and Water portfolio.
• This measure extends the 2022–23 October Budget measure titled Murray‑Darling Basin – water market reform, the 2023–24 Budget measures titled National Water Reform – First Nations peoples' water ownership and Future‑proofing the Murray‑Darling Basin, and builds on the 2022–23 October Budget measure titled Water for Australia Plan and the 2024–25 Budget measures titled Sustaining Water Functions and Climate Change, Energy, the Environment and Water – cost recovery arrangements.