When the Advanced Manufacturing Growth Centre (AMGC) recently unveiled its new $10 million SME Industrial Decarbonisation Fund, the reaction across Australian industry was immediate. Alongside constructive questions about practicality and timing, one message came through clearly: manufacturers are paying close attention to the opportunity.
That strong response prompted a useful moment of reflection. How could we make sure the Fund was understood as a practical, commercially grounded opportunity rather than a one-size-fits-all mandate? And how could we better explain that decarbonisation, done well, is about strengthening manufacturers?
The reality on the ground has been overwhelmingly encouraging. Expressions of interest have been strong, applications are active, and conversations with manufacturers are showing a clear appetite for practical projects that reduce costs, improve productivity, and support long-term competitiveness.
The feedback has reinforced an important point: electrification is not a magic bullet. Every factory floor has its own constraints and, for some complex or highly specialised processes, fossil fuels remain a technical necessity. Change will only stick when it makes commercial sense. For some manufacturers, that shift is not yet viable – and that is a practical reality worth recognising.
At the same time, conversations across industry are showing that, for many manufacturers, the business case is increasingly compelling. Moving away from fossil fuels can become a distinct operational advantage: lowering long-term input costs, strengthening supply chains, and building resilience.
That is why AMGC has and will be visiting manufacturers across the country. Funded by the Australian Renewable Energy Agency (ARENA), this co-investment initiative supports practical, bottom-up solutions that reflect real factory conditions.
Industry response to date has been strong, including Expressions of Interest from smallgoods producers, distillers, dairies and other food and beverage manufacturers, alongside heavy equipment businesses, defence suppliers, construction materials firms, medtech companies and automotive component manufacturers.
That diversity reflects an important point: there is no single pathway to industrial decarbonisation, particularly for food and beverage manufacturers where balancing heat, hygiene, throughput and product consistency is critical. Many local and international manufacturers are already finding that well-planned energy transition projects can deliver more than emissions reductions. The Australian Alliance for Energy Productivity (A2EP) provides a practical resource for the sector, with food and beverage-focused fact sheets, calculators and webinars that help manufacturers assess options such as process heat upgrades, heat recovery, refrigeration optimisation and electrification. Across the manufacturers AMGC has spoken with, one theme is consistent: new process technologies are delivering real productivity, quality, safety and resilience improvements.
What stands out from these nationwide conversations is that manufacturers are not looking at the Fund simply through an emissions lens. For food and beverage businesses, the same investment can support practical operating priorities: reducing energy and water-related costs, lowering emissions, improving productivity, and maintaining product quality.
Energy for Global Competitiveness
Looking beyond the factory floor reveals a broader economic reality: transitioning away from fossil fuels directly drives international competitiveness and shields businesses from volatile energy markets. Moreover, global titans like Shell, BP, BHP, Fortescue, and many others are navigating increasingly strict Scope 1 and Scope 2 emissions mandates – requirements that are rapidly flowing down their supply chains to local SMEs.
Recent OECD analysis reinforces this shift, proving that higher industrial energy productivity accelerates decarbonisation while improving financial performance. The findings uncover vast performance gaps between companies operating within the exact same sector. Manufacturers that proactively invest in efficient technologies extract significantly more value from every unit of energy consumed, radically sharpening their long-term market advantage.
The tangible efficiency gains are undeniable. While traditional gas boilers constantly bleed heat through exhaust stacks, data from the Australian Alliance for Energy Productivity (A2EP) shows that electric heat pumps can deliver up to four times more thermal energy than they consume in suitable applications. Similarly, standard gas furnaces waste immense power by "cooking the whole room" just to heat a specific part, dragging operational efficiency down to a dismal 30 per cent. Conversely, ARENA-backed industrial audits reveal that electric induction transfers energy directly into the target metal, achieving a staggering 90 per cent thermal-to-object efficiency.
Electrification as a Productivity Play
Traditional gas-fired infrastructure is often constrained by indirect heat transfer. Gas furnaces rely on convection currents to warm air, furnace atmospheres, and refractory materials before heat reaches the target component, introducing non-productive lag into production schedules.
Electrification reclaims this lost production time. Gas ovens often need to run before a shift just to reach operating temperature. Electric infrared curing lines and industrial heat pumps can reach useful conditions far more quickly. ARENA-supported process heat studies show that industrial heat pumps are highly feasible in suitable low-temperature applications, particularly when supported by good energy data, heat mapping, and process integration.
Eliminating Waste and Defect Rates
Fossil fuel combustion in traditional boiler systems can introduce pressure and temperature fluctuations, uneven thermal zones, and risks of boiler chemical carryover into production environments. In high-tolerance food and beverage processing, these variables can disrupt pasteurisation consistency, compromise product quality, and increase batch spoilage or post-production product loss.
In traditional natural gas-fired steam boilers, maintaining tight temperature control across large steam networks is a constant challenge, sometimes leading to localised scorching or under-processing that reduces the total yield of raw ingredients converted into premium, high-value consumer goods. The steady, clean nature of electrified thermal processing - such as electrically driven mechanical vapour recompression (MVR) systems and high-temperature industrial heat pumps - significantly reduces these thermal volatility losses by generating precise, highly efficient process heat.
Electric thermal processing gives plant engineers precise control over process steam and hot water delivery, ensuring exact heat application during critical cooking, evaporation, or clean-in-place (CIP) sanitisation stages. This eliminates the risk of internal thermal distortion or batch degradation, supporting reliable product repeatability. That precision is vital in disciplines such as dairy processing, commercial sugar refining, and beverage bottling, where ultra-low defect rates and stringent hygiene standards are mandatory. In large-scale food manufacturing, minimising boiler-related variables similarly supports absolute product consistency, cleaner processing conditions, and stronger quality assurance for demanding export markets.
A Safer Workforce
Industrial safety and commercial productivity are closely linked. Cleaner, cooler, and more controlled factory environments reduce operational disruption and help workers focus on high-quality output.
Replacing combustion assets with electrified machinery reduces emissions, particulate matter, and combustible fuel-handling risks inside the factory. It cuts waste heat on the shop floor, easing ventilation, HVAC, and cooling loads while delivering longer-term asset management benefits.
Future-Proofing Through Decarbonisation
Industrial decarbonisation should be viewed as a practical modernisation strategy, not an environmental chore. As Australia’s electricity grid shifts toward renewable energy, the financial case for electrification will only strengthen. Where electric alternatives are commercially viable, manufacturers can future-proof operations against fossil fuel price volatility and carbon liabilities.
AMGC recognises that capital upgrades must improve a firm’s bottom line before old assets are replaced. To support that balance, the $10 million SME Industrial Decarbonisation Fund helps eligible SMEs upgrade fossil-fuelled equipment, upskill workers, and meet compliance requirements.
The Fund targets three priority areas where electrification unlocks the highest potential productivity gains:
- Surface Treatment: Upgrading from gas ovens to fast electric infrared or induction systems for paints, coatings, and galvanising.
- Process Steam: Replacing inefficient gas boilers with precise electric boilers or industrial heat pumps for drying and sterilisation.
- Metals Processing: Electrifying furnaces and kilns or adopting advanced electric arc and induction melting systems.
For eligible projects valued up to $1 million, AMGC provides up to 50 per cent matched funding on a dollar-for-dollar basis. To qualify, manufacturers must be Australian owned, operate locally, and employ fewer than 200 staff. Interest in the Fund has been high, with applications open now and assessed continuously until 31 December 2027, or until the funding pool is fully allocated.
While the grid continues to transition, the immediate gains from electrification – speed, precision and safety – are available today. The interest already shown in the Fund suggests many manufacturers recognise the commercial opportunity. For those with viable electrification projects, this fund offers a practical, bottom-up pathway to build leaner, faster, and more competitive low-emission operations.
