Up to $50 million to cut industrial emissions. Here's who can apply, and who else stands to gain.

The short version: Round 2 of the Powering the Regions Fund Safeguard Transformation Stream offers grants of $500,000 to $50 million, covering up to 50 per cent of eligible project expenditure, to help trade-exposed Safeguard Mechanism facilities cut their emissions. Only the owners or operators of those facilities can apply. Applications are assessed in batches: Batch 2 takes applications received up to 5 November 2026, and the round closes at 5.00pm AEST on 6 May 2027.

Most small businesses and community organisations won't be eligible for this one, and that's fine. It's still worth knowing about. When a large industrial site wins a grant like this, much of the money is spent with other businesses: equipment suppliers, engineers, installers and trainers. If that's you, this round could shape who's buying over the next few years.

At a glance

What the program is for

The Safeguard Mechanism applies to industrial facilities that emit more than 100,000 tonnes of carbon dioxide equivalent a year, according to the Clean Energy Regulator.

The grant guidelines say this stream aims to help trade-exposed Safeguard facilities reduce emissions, reduce the risk of "carbon leakage" (production moving overseas to countries with weaker emissions policies), and build the skills of existing industrial workers in new equipment or processes. The Australian Government has announced $600 million over the life of the stream.

Projects must include at least one of two kinds of activity:

• Direct abatement: on-site work that reduces scope 1 emissions, such as energy efficiency upgrades, fuel switching, equipment upgrades for lower-carbon fuels, cutting fugitive emissions, or carbon capture.
• Common user infrastructure: off-site shared infrastructure that reduces scope 1 emissions at one or more eligible facilities, such as hydrogen or bioenergy production, off-grid electricity and storage, or carbon capture projects. Shared infrastructure must be in Regional Australia, which the guidelines define as outside a Greater Capital City, but including Kwinana.

Who can apply

The guidelines are strict here. You must own or operate an eligible trade-exposed Safeguard facility, hold an ABN, and be an Australian incorporated entity, a company limited by guarantee or an incorporated association. Facilities that are new or expanded coal or gas production facilities are excluded.

Joint applications are welcome, but the lead organisation must be an eligible facility. Only the lead can submit the application and sign the grant agreement. Each project partner provides a letter of support setting out its role, experience and any cash contribution.

Why a smaller business might care

If you supply decarbonisation equipment, engineering, installation or training, you generally can't apply yourself. But the guidelines let a successful facility spend its grant on several kinds of cost that often go to outside businesses:

• Plant and equipment, purchased, leased or built, including related freight and installation.
• Contract expenditure, which the guidelines describe as project activities you contract others to do, whether another organisation or an individual engaged under a separate contract.
• Staff training that directly supports the project outcomes.
• Emissions audits, up to two: one to set a baseline and one to confirm results.

That's a commercial observation, not a promise of work. The facility decides who it buys from, and no particular project is guaranteed funding. Still, eligible facilities may be planning projects and asking for quotes now.

The rules for contractors are specific. All contractors need a written contract, letter or purchase order before any project work starts. Invoices must describe the work and show the hours and hourly rates involved, and you must keep records of your costs on the project. If the facility can't produce those records, the guidelines say the expense may not count as eligible. Also, costs incurred before the grant agreement is executed are not eligible, so work done early may not be covered.

If you do become a partner or apply for a different grant yourself, GrantAlly can help you build a budget that separates eligible, excluded and unresolved costs and shows your funding share and contribution. See how budgets work.

Key dates and how to apply

Round 2 opened on 5 February 2026 and stays open until 5.00pm AEST on 6 May 2027. Applications are grouped into batches for assessment. The business.gov.au program page lists the batches as:

• Batch 1: 5 February 2026 to 5 May 2026 (closed)
• Batch 2: 6 May 2026 to 5 November 2026
• Batch 3: 6 November 2026 to 6 May 2027

The program FAQs say applications received after 5 November 2026 will be considered in the final batch. Batch 1 had up to 50 per cent of the funding, and Batches 2 and 3 have up to 25 per cent each, with any unallocated money rolling into the next batch. The program page doesn't state a time for the Batch 2 cut-off. The FAQs say applications close at 5pm AEST and recommend submitting early.

Applications go through the business grants portal on business.gov.au. Eligibility is checked by the Business Grants Hub, an independent expert panel scores applications, and the Minister for Climate Change and Energy makes the final decision. Projects can run for up to 60 months and must finish by 31 March 2033.

What to do now

• If you run an eligible facility, read the guidelines and FAQs, and decide whether to aim for Batch 2 or Batch 3.
• Plan your cash co-contribution early. In-kind contributions are not eligible, and no more than 40 per cent of your co-contribution can come from government sources. Our guide to co-contributions and matched funding explains how this works.
• If you're a supplier, get your quotes, written contract terms and cost records in a shape that fits the guidelines' evidence rules.
• Don't start work or commit to costs before a grant agreement is executed unless you accept the cost may not be covered.
• Check what counts as eligible before you build a budget. See what are eligible costs in a grant?
• If something is unclear, call the program on 13 28 46.

Things to watch

This is an open competitive round, so meeting the eligibility rules doesn't guarantee funding. Applications are scored on contribution to emissions reduction targets (50 points), capacity to deliver (10 points) and the impact of grant funding (40 points). The guidelines exclude feasibility studies (other than limited engineering design studies), carbon credits, and funding from another Commonwealth grant program for the same project. Dates can change, so check business.gov.au first.

Frequently asked questions

Can a small business apply for the Safeguard Transformation Stream?

Only if it owns or operates an eligible trade-exposed Safeguard Mechanism facility, which covers facilities emitting more than 100,000 tonnes of carbon dioxide equivalent a year. Most small businesses won't qualify, but they may supply equipment or services to facilities that do.

When is the next Safeguard Transformation Stream deadline?

Batch 2 covers applications received from 6 May 2026 to 5 November 2026. Applications received after that are assessed in the final batch, and the round closes at 5.00pm AEST on 6 May 2027.

Can grant money be spent on contractors and equipment?

Yes, for the facility that receives the grant. The guidelines list plant and equipment and contract expenditure as eligible, provided contractors have a written contract before work starts and costs are incurred after the grant agreement is executed.