$321 Million Safeguard Transformation Stream (STS) Round 2 – 2026

Executive Summary (Overview): The Australian Government has opened Round 2 of the Safeguard Transformation Stream (STS) with $321 million available to support trade-exposed industrial facilities in reducing emissions. This technology-neutral grant provides between $500,000 and $50 million per project, covering up to 50% of eligible decarbonisation expenditure. Facility owners under the Safeguard Mechanism can now apply through business.gov.au, with information sessions scheduled for late February and early April 2025.

At a Glance: STS Round 2 Quick Facts

The “Hard” Eligibility Filter: Pass or Fail Before You Apply

If you fail any of the criteria below, your application will be rejected regardless of project quality. This is the most critical section of this guide, so read carefully.

✅ Must-Haves (Non-Negotiable)

1. Safeguard Mechanism Coverage Status Your facility must be covered under the Safeguard Mechanism. This means your facility produces more than 100,000 tonnes of CO2-equivalent (Scope 1 direct emissions) per year. Your facility should already be registered with the Clean Energy Regulator under the National Greenhouse and Energy Reporting (NGER) scheme.

Industrial Example: A cement manufacturing facility in regional Queensland emitting 450,000 tonnes CO2-e annually qualifies. A mid-sized food processor emitting 85,000 tonnes CO2-e does not, even if they’re planning to expand.

2. Trade-Exposed Facility Classification You must be classified as a “trade-exposed” facility under the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015, Schedule 2. Trade exposure means your facility competes in international markets and faces pressure from overseas competitors with potentially lower emissions standards.

Industrial Example: An aluminium smelter in Gladstone producing product for export is trade-exposed. A domestic-only cement supplier serving local construction is not automatically trade-exposed unless formally classified.

3. Valid Australian Business Number (ABN) Your entity must hold a current ABN and be either:

• Incorporated in Australia
• A company limited by guarantee
• An incorporated association

Joint applications are permitted, but you must designate one lead organisation that meets these requirements.

4. Minimum Financial Co-Contribution You must commit to at least 10% cash contribution from your own resources. The remaining 40% (to reach 50% total co-funding) can come from other non-Commonwealth sources, including state/territory grants or commercial loans.

Industrial Example: For a $20 million project seeking the maximum $10 million STS grant, you need $2 million minimum in cash, plus another $8 million from any eligible source.

5. Compliance with National Redress Scheme Your organisation (and any partner organisations) must NOT be listed on the National Redress Scheme website as having failed to join or signify intent to join the Scheme.
6. Workplace Gender Equality Compliance If you employ 100 or more staff, you must be compliant with the Workplace Gender Equality Act 2012. Non-compliance is an automatic disqualifier.
7. No Double-Dipping on Commonwealth Grants If your project receives funding from another Commonwealth grant program, you cannot also receive STS funding for the same activities. However, you can apply for multiple Powering the Regions Fund streams, provided each application relates to a different project.

❌ Dealbreakers (Instant Rejection)

1. New or Expanded Coal or Gas Production Facilities This is the single most common eligibility trap. If you own or operate a trade-exposed Safeguard facility that is either:

• A new coal or gas production facility, OR
• An existing coal or gas facility that has materially expanded or plans to materially expand production

You are automatically ineligible. Period.

The “Material Expansion” Trap: What counts as “material”? The guidelines require you to demonstrate that you have not materially expanded (and do not plan to materially expand) your coal or gas production compared to historical levels. You’ll need to provide:

• At least four years of historical production data
• Forecast production figures
• A formal statement from senior representatives (CEO or CFO level) confirming no expansion plans

Industrial Example (FAIL): A coal mine in the Bowen Basin that increased production from 8 million tonnes per annum (Mtpa) in 2021 to 12 Mtpa in 2024 is considered materially expanded and ineligible, even if the expansion is complete.

Industrial Example (PASS): An existing LNG facility maintaining stable production at 5 Mtpa for the past five years, applying for funding to install methane capture technology, can qualify (provided they submit the required documentation).

2. Projects That Don’t Reduce Scope 1 Emissions Your project must demonstrably reduce Scope 1 (direct) emissions. Scope 2 (purchased electricity) or Scope 3 (supply chain) reductions alone do not qualify under STS Round 2.

Industrial Example (FAIL): A manufacturing facility switching to 100% renewable electricity from the grid reduces Scope 2 emissions but not Scope 1. This does not qualify for STS unless combined with on-site Scope 1 reductions.

Industrial Example (PASS): The same facility electrifying its gas-fired process heating equipment (replacing natural gas burners with electric heating powered by renewable energy) directly reduces Scope 1 emissions and qualifies.

3. Emissions Below Safeguard Threshold During Project Delivery While it’s not grounds for grant termination if your emissions fall below 100,000 tonnes during project delivery, you must be above the threshold at the time of application.

The “Application Killer” Section: 3 Non-Obvious Reasons Applications Fail

These are the hidden traps that sink otherwise strong applications. Most applicants don’t realise these until it’s too late.

Application Killer #1: The “Technology Neutrality” Misinterpretation

STS Round 2 is marketed as “technology neutral,” and the guidelines list successful Round 1 technologies including renewable energy, energy efficiency, and electrification. But this doesn’t mean every technology qualifies.

The Trap: Many applicants propose innovative or experimental technologies without demonstrating their emissions reduction potential or commercial viability. The Assessment Committee prioritises proven technologies with quantifiable emissions outcomes.

What Went Wrong: A chemical manufacturer applied for funding to trial an unproven carbon capture process with no pilot data, no third-party validation, and only theoretical emissions reduction claims. The application was scored poorly on the “project impact” and “value for money” criteria.

How to Avoid It: If proposing new or emerging technology, you need:

• Independent engineering assessments (e.g., FEED studies)
• Pilot or demonstration-phase data showing actual emissions reductions
• Clear pathway to commercialisation
• Detailed risk mitigation strategies

Industrial Example (Success): Kestrel Coal in Bowen Basin received $37.2 million in Round 1 for methane capture technology, a proven system with quantified emissions outcomes and established commercial suppliers.

Application Killer #2: The “Invoice Date Trap”

Here’s a killer detail buried in the guidelines: only expenditure incurred AFTER your grant agreement is executed is eligible. Many applicants assume they can claim retrospective costs or lock in suppliers before their grant is approved.

The Trap: You sign a $15 million equipment purchase order in March 2025 thinking your STS application (submitted in February) will succeed. Your grant isn’t approved until June. That $15 million is now ineligible expenditure.

What Went Wrong: A Victorian refinery ordered custom electrification equipment worth $8 million before receiving their grant offer letter, assuming approval was a formality. The expenditure was deemed ineligible, leaving a massive funding gap.

How to Avoid It:

• Do NOT sign contracts, purchase orders, or commit expenditure until you have a signed Grant Agreement
• Build contingency timelines assuming approval delays
• Use conditional agreements with suppliers that only execute upon funding confirmation

Industrial Example (Success): Incitec Pivot Fertilisers in Phosphate Hill waited until their $28 million grant was formally executed before placing orders for hybrid renewable energy equipment. All costs were eligible.

Application Killer #3: The “20MB Attachment Ceiling” Document Disaster

The guidelines explicitly state: “The total of all attachments cannot exceed 20MB and the Committee will not consider information in attachments that we do not request.”

The Trap: Applicants submit comprehensive engineering reports, detailed financial models, multiple letters of support, and extensive technical appendices, assuming “more is better.” They hit the 20MB limit (or exceed it) and their critical documents get truncated or ignored.

What Went Wrong: A Western Australian facility included a 45MB engineering feasibility study, thinking the Committee needed full technical detail. The file was rejected, and the application was assessed without the core technical justification, resulting in a “poor” rating for project viability.

How to Avoid It:

• Prioritise only requested documents per Section 7.1 of the guidelines
• Compress files without losing quality (use PDF compression tools)
• Summarise technical reports in concise executive summaries (2-3 pages max)
• Host large technical documents on secure cloud storage and provide access links in your application narrative

Industrial Example (Success): Dyno Nobel in Bowen Basin submitted a tightly curated 18MB application package: project plan summary, financial model, emissions baseline report, and letters of support from peak industry bodies. All critical information was accessible within the limit.

Step-by-Step Submission Guide: 

Step 1: Pre-Application Preparation (4-6 Weeks Before Submission)

Document Checklist:

• Australian Business Number (ABN) verification
• Safeguard Mechanism facility registration confirmation (from Clean Energy Regulator)
• Trade-exposed facility classification evidence (Schedule 2, NGER Safeguard Mechanism Rule 2015)
• Historical emissions data (minimum 4 years for coal/gas facilities)
• Financial statements (last 3 years)
• Board resolution or CEO authorisation to apply
• Workplace Gender Equality compliance statement (if 100+ employees)
• National Redress Scheme compliance confirmation

Project Development Requirements:

• Detailed project plan (including timeline, milestones, deliverables)
• Emissions baseline and reduction projections (verified by independent assessor if possible)
• Itemised budget with eligible/ineligible expenditure clearly separated
• Evidence of financial co-contribution (bank statements, board commitment letters, or conditional loan approvals)
• Risk management plan
• Skills development and workforce training plan

Unsure of your eligibility? Check Your Eligibility Probability Here.

Step 2: Register on business.gov.au (1-2 Days)

1. Visit business.gov.au
2. Create an account or log in with your existing credentials
3. Complete organisation profile (ABN, entity type, contact details)
4. Authorise key personnel to submit applications on behalf of your organisation
5. Verify email and activate account

Step 3: Access the STS Round 2 Application Form (Immediate)

1. Search for “Powering the Regions Fund Safeguard Transformation Stream Round 2” in the grants portal
2. Review the Grant Opportunity Guidelines in full (this is mandatory reading)
3. Download the sample application form to preview questions and required fields
4. Attend an information session (late February or early April 2025, register via PRF@dcceew.gov.au)

Step 4: Complete the Application Form (2-4 Weeks)

The application is structured around four key merit criteria. Your responses must directly address these:

Merit Criterion 1: Project Impact (35% weighting) Demonstrate how your project will:

• Reduce Scope 1 emissions at your facility (quantified in tonnes CO2-e per annum)
• Contribute to Australia’s 2030 and 2050 emissions reduction targets
• Support workforce skills development in low-emissions technologies
• Reduce carbon leakage risk (retaining emissions-intensive production in Australia)

Industrial Example: “This project will reduce 120,000 tonnes CO2-e annually by electrifying our ammonia production process, representing 35% of our facility’s current Scope 1 emissions and equivalent to removing 26,000 passenger vehicles from Australian roads. The project supports Australia’s 2030 target by delivering verifiable abatement within the Safeguard trajectory while retaining 180 skilled manufacturing jobs in regional Queensland.”

Merit Criterion 2: Project Delivery and Risk (25% weighting) Prove you can deliver the project on time, on budget, and to specification:

• Project governance and management structure
• Track record in capital projects (provide examples)
• Risk identification and mitigation strategies
• Contingency planning
• Supply chain resilience

Merit Criterion 3: Capacity, Capability, and Resources (20% weighting) Evidence that your organisation has:

• Financial capacity to co-fund (provide audited financial statements)
• Technical expertise (in-house or contracted)
• Relevant industry experience
• Governance systems to manage grant funding

Merit Criterion 4: Value for Money (20% weighting) Justify the cost-effectiveness of your project:

• Abatement cost per tonne of CO2-e reduced (aim for competitive rates, ideally under $200/tCO2-e)
• Alignment with international best practice benchmarks
• Justification of capital costs (provide quotes, tenders, or market assessments)
• Broader economic or social co-benefits (e.g., regional employment, supply chain development)

Step 5: Attach Supporting Documentation (Final Week Before Submission)

Remember the 20MB limit. Attach only what’s requested in Section 7.1:

1. Project Plan (10-15 pages maximum, executive summary format)
2. Financial Model (spreadsheet showing eligible expenditure, co-funding sources, cash flow)
3. Emissions Baseline and Reduction Projection (independently verified if possible)
4. Letters of Support (from industry associations, workforce unions, or local government)
5. Evidence of Co-Funding (bank letter, board resolution, or conditional loan approval)
6. For coal/gas facilities: Historical production data, forecast figures, and CEO/CFO statement

Compress all files, label them clearly (e.g., “STS_R2_ProjectPlan_FacilityName.pdf”), and upload in order of importance.

Unsure of your eligibility? Check Your Eligibility Probability Here.

Step 6: Submit and Await Batch Assessment

1. Click “Submit Application” on business.gov.au
2. Receive automated confirmation email (within 24 hours)
3. Applications are assessed in competitive batches
4. Assessment Committee evaluates all applications against the four merit criteria
5. Timeframe: typically 3-6 months from submission to decision (based on Round 1 experience)

Step 7: If Successful

1. You’ll receive a Letter of Offer in the business.gov.au portal
2. Review the offer conditions carefully (grant amount, milestones, reporting requirements)
3. Sign the Grant Agreement (do NOT commit expenditure before this)
4. Commence project and meet reporting milestones
5. Claim reimbursement as per the agreement schedule

Step 8: If Unsuccessful

1. Request feedback from the Department (this is your right)
2. Identify weaknesses in your application (common issues: insufficient emissions quantification, poor value-for-money justification, incomplete risk analysis)
3. Strengthen your proposal and reapply in subsequent batches or rounds

How STS Round 2 Fits Into the Powering the Regions Fund Ecosystem

The Safeguard Transformation Stream is one part of the broader $1 billion+ Powering the Regions Fund (PRF), which includes:

• STS (Safeguard Transformation Stream): $600 million total ($321 million in Round 2) for trade-exposed Safeguard facilities to reduce Scope 1 emissions
• ITS (Industrial Transformation Stream): $400 million for regional industrial facilities (not necessarily trade-exposed) to reduce Scope 1 and Scope 2 emissions
• Critical Inputs to Clean Energy Industries Stream (CICEI): Targeted funding for cement, lime, alumina, and aluminium sectors

Can you apply for multiple streams? Yes, but each application must be for a different project. You cannot “double dip” by applying for STS and ITS funding for the same activities.

Industrial Example: A steel manufacturer could apply for:

• STS funding to electrify blast furnaces (Scope 1 reduction at trade-exposed facility)
• ITS funding to install on-site solar and battery storage (Scope 2 reduction at regional facility)

These are distinct projects with different emission scopes and can both be funded, provided each application meets its respective criteria.

What Technologies Qualify? Insights from Round 1 Recipients

The STS is “technology neutral,” but Round 1 outcomes reveal clear patterns. Here’s what succeeded:

Proven Technology Categories:

1. Electrification of Industrial Processes

• Gas-fired heating to electric heating
• Diesel-powered equipment to electric alternatives
• Process electrification for ammonia, chemicals, metals

Example: Viva Energy Refinery in Geelong received $3 million for electrification projects.

2. Renewable Energy Integration

• On-site solar and wind generation
• Hybrid renewable systems (solar + battery + backup)
• Green hydrogen for industrial heat

Example: Incitec Pivot Fertilisers in Phosphate Hill received $28 million for hybrid renewable energy systems.

3. Methane and Fugitive Emissions Capture

• Coal seam gas capture and utilisation
• Landfill gas recovery
• Ventilation air methane (VAM) abatement

Example: Kestrel Coal in Bowen Basin received $37.2 million for methane capture technology.

4. Energy Efficiency Upgrades

• High-efficiency motors and drives
• Waste heat recovery systems
• Process optimisation and controls

Example: Boyne Smelter in Gladstone received $5.4 million for energy efficiency improvements in aluminium production.

5. Chemical Process Innovation

• Lower-emissions ammonia production
• Carbon capture and utilisation (CCU)
• Alternative feedstocks and fuel switching

Example: Dyno Nobel in Bowen Basin received $9.8 million for lower-emissions ammonia production.

Example: CSBP Limited in Kwinana received $7.5 million to reduce emissions from chemical production.

FAQ & Glossary: Your Top 10 Questions Answered

1. Is the STS grant taxable income?

The Australian Taxation Office (ATO) is best placed to provide definitive advice on the tax treatment of grants. However, generally, grants received for capital expenditure (e.g., purchasing equipment) may have different tax treatment than grants for operating expenditure. Consult your accountant or tax advisor.

2. Can I claim GST on eligible expenditure?

If you are registered for GST, eligible expenditure should be stated exclusive of GST in your application. The grant amount will be calculated on the GST-exclusive amount.

3. What happens if my facility’s emissions fall below 100,000 tonnes during project delivery?

This would NOT be grounds for termination of your grant agreement. You must be above the Safeguard threshold at the time of application, but subsequent changes do not invalidate the grant.

4. Can I use state or territory government grants as part of my co-contribution?

Yes. Funding from state, territory, and local governments is acceptable for the remaining 40% co-contribution (beyond your 10% cash minimum). However, you cannot use another Commonwealth grant for the same activities.

5. How long does the assessment process take?

Based on Round 1 experience, assessment typically takes 3-6 months from the close of each batch. STS Round 2 uses a batch assessment process, so timelines depend on which batch your application enters.

6. Can I submit multiple applications?

Yes. Eligible entities can submit multiple applications, provided each relates to a different project. However, focus on quality over quantity—one strong application is better than multiple weak ones.

7. What is “trade-exposed” and how do I prove it?

Trade exposure is defined in Schedule 2 of the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015. Your facility must be formally classified as trade-exposed by the Clean Energy Regulator. This classification is based on factors like export intensity and industry benchmarks.

8. Can I change my project scope after receiving the grant?

Minor variations may be permitted with departmental approval, but significant changes to project scope, budget, or outcomes may require renegotiation or could result in grant termination. Always seek approval before making changes.

9. What is the maximum project period?

The maximum project period is 48 months (4 years) from the execution of the Grant Agreement.

10. How competitive is STS Round 2?

STS Round 2 has $321 million available, slightly more than Round 1’s initial $300 million allocation. However, demand is expected to be high following Round 1’s success. Applications are assessed competitively, so only the highest-scoring projects will receive funding. Your application must excel across all four merit criteria.

Unsure of your eligibility? Check Your Eligibility Probability Here.

Glossary of Key Terms

Safeguard Mechanism: A legislative framework under the National Greenhouse and Energy Reporting (NGER) Act that requires Australia’s largest industrial emitters (>100,000 tonnes CO2-e annually) to keep net emissions below a baseline and contribute to national emissions reduction targets.

Trade-Exposed Facility: An industrial facility that competes in international markets and is vulnerable to carbon leakage (relocation of emissions-intensive production to countries with less stringent climate policies). Formally defined in Schedule 2 of the NGER (Safeguard Mechanism) Rule 2015.

Scope 1 Emissions: Direct greenhouse gas emissions from sources owned or controlled by the facility (e.g., combustion of natural gas, coal, or diesel on-site).

Scope 2 Emissions: Indirect emissions from purchased electricity, steam, heating, or cooling consumed by the facility.

Carbon Leakage: The relocation of emissions-intensive production from countries with strong climate policies (like Australia) to countries with weaker policies, resulting in no net global emissions reduction.

Baseline Decline Rate: Under the reformed Safeguard Mechanism (commenced 1 July 2023), facility baselines decline at 4.9% per year to 2030 by default, requiring facilities to reduce emissions or purchase offsets to stay compliant.

TEBA (Trade-Exposed Baseline-Adjusted) Facility: A facility eligible for a concessional (slower) baseline decline rate based on trade exposure and scheme impact, with a minimum decline rate of 2% (or 1% for manufacturers).

ACCUs (Australian Carbon Credit Units): Carbon offset credits generated through verified emissions reduction projects under the Emissions Reduction Fund. Safeguard facilities can purchase ACCUs to offset emissions above their baseline.

SMCs (Safeguard Mechanism Credits): Credits generated by a Safeguard facility that exceeds its baseline reduction target. These can be sold to other facilities that need offsets.

Real-World Industrial Case Studies: What “Good” Looks Like

Case Study 1: Kestrel Coal – Methane Capture Technology

Grant Amount: $37.2 million (Round 1) Location: Bowen Basin, Queensland Technology: Ventilation air methane (VAM) capture and destruction Emissions Reduction: Estimated 900,000 tonnes CO2-e over project life Why It Succeeded:

• Proven technology with international case studies
• Quantified emissions abatement with independent verification
• Strong value for money (abatement cost well below $200/tCO2-e)
• Clear workforce development plan (training in VAM systems operation)
• Addressed carbon leakage risk (maintaining coal production competitiveness while reducing emissions intensity)

Key Lesson: Established technologies with verified performance data score highest on merit criteria.

Case Study 2: Incitec Pivot Fertilisers – Hybrid Renewable Energy

Grant Amount: $28 million (Round 1) Location: Phosphate Hill, Queensland Technology: Solar PV + battery storage + diesel backup hybrid system Emissions Reduction: Estimated 50,000 tonnes CO2-e annually Why It Succeeded:

• Comprehensive feasibility study with detailed engineering design
• Clear financial model showing co-funding from corporate capital allocation
• Integration with existing operations (no production downtime)
• Workforce upskilling plan for renewable energy management
• Broader regional benefits (renewable energy expertise development in remote Queensland)

Key Lesson: Projects demonstrating operational integration and regional co-benefits strengthen value-for-money justification.

Case Study 3: CSBP Limited – Chemical Production Emissions Reduction

Grant Amount: $7.5 million (Round 1) Location: Kwinana, Western Australia Technology: Process optimisation and fuel switching in ammonia production Emissions Reduction: Estimated 35,000 tonnes CO2-e annually Why It Succeeded:

• Focused on hard-to-abate chemical sector (aligned with government priorities)
• Demonstrated technical capability (in-house chemical engineering expertise)
• Strong track record of capital project delivery
• Clear emissions baseline with third-party verification
• Competitive abatement cost (approximately $180/tCO2-e)

Key Lesson: Hard-to-abate sectors with demonstrable technical capability and competitive abatement costs are prioritised.

Why Now? The Strategic Context for STS Round 2

The Safeguard Transformation Stream is not just a grant program—it’s a strategic pillar of Australia’s industrial decarbonisation pathway. Here’s why the Australian Government is investing $321 million in Round 2:

1. Meeting Australia’s 2030 and 2050 Targets

Australia has committed to:

• 43% emissions reduction below 2005 levels by 2030
• Net zero emissions by 2050

The Safeguard Mechanism facilities collectively account for approximately 28% of Australia’s total emissions. These facilities must reduce their net emissions to 100 million tonnes CO2-e by 2030 and zero by 2050. STS funding accelerates this transition by making decarbonisation investments financially viable.

2. Preventing Carbon Leakage and Protecting Jobs

Trade-exposed industries face a critical challenge: reduce emissions while remaining internationally competitive. Without support, there’s a risk these industries relocate to countries with weaker climate policies, resulting in job losses and no net global emissions reduction. STS funding ensures Australia retains its industrial base while decarbonising.

3. Advancing the “Future Made in Australia” Agenda

The Australian Government’s Future Made in Australia initiative prioritises developing sovereign capability in clean energy industries (hydrogen, critical minerals, clean steel, green chemicals). STS Round 2 complements this by supporting existing industries to become cleaner, creating demand for Australian-made clean technology and expertise.

4. Building Workforce Capability in Low-Emissions Technologies

Every STS-funded project must include a skills development component. This builds Australia’s workforce capability in renewable energy, electrification, carbon capture, and other emerging technologies—critical for long-term industrial competitiveness.

How to Maximise Your STS Round 2 Success Rate

Based on Round 1 outcomes and assessment feedback, here are the insider strategies:

Strategy 1: Hire Independent Technical Validators

Applications with third-party engineering assessments (e.g., Front-End Engineering Design studies, emissions verification reports) consistently score higher on project viability and value-for-money criteria. Budget for this early.

Strategy 2: Quantify Everything

Vague claims like “significant emissions reduction” fail. Use precise metrics:

• Tonnes CO2-e reduced per annum
• Abatement cost per tonne ($/tCO2-e)
• Project internal rate of return (IRR)
• Jobs created or retained (FTE numbers)

Strategy 3: Align with Government Priorities

Review recent Ministerial statements, the Powering Australia plan, and the Future Made in Australia policy documents. Projects aligned with stated priorities (e.g., critical minerals processing, clean steel, green chemicals) receive favourable assessment.

Strategy 4: Demonstrate Additionality

The Assessment Committee wants to know: “Would this project proceed without STS funding?” If the answer is “yes,” your value-for-money score suffers. Clearly articulate why the grant is essential (e.g., closing a financial viability gap, accelerating timeline).

Strategy 5: Attend Information Sessions

The Department hosts information sessions in late February and early April 2025. These sessions provide:

• Clarification on eligibility
• Insights into assessment criteria
• Q&A with program managers
• Networking with other applicants

Register by emailing PRF@dcceew.gov.au.

Unsure of your eligibility? Check Your Eligibility Probability Here.

Final Checklist: Are You Ready to Apply?

Before submitting, ensure you can answer “YES” to every question:

Eligibility

•  My facility emits >100,000 tonnes CO2-e annually (Safeguard Mechanism coverage)
•  My facility is classified as trade-exposed (Schedule 2, NGER Rule 2015)
•  I am NOT a new or expanded coal/gas production facility
•  I have a valid ABN and eligible entity type
•  I am compliant with National Redress Scheme and Workplace Gender Equality Act (if applicable)
•  My project will reduce Scope 1 emissions (not just Scope 2 or 3)
•  I have NOT received (and will not receive) another Commonwealth grant for these same activities

Financial Readiness

•  I can commit at least 10% cash co-funding
•  I have secured (or have a clear path to) the remaining 40% co-funding
•  My financial statements demonstrate capacity to deliver this project
•  I understand I cannot claim costs incurred before Grant Agreement execution

Project Readiness

•  I have a detailed project plan with timeline, milestones, and deliverables
•  My emissions baseline is documented and verifiable
•  My emissions reduction projections are quantified and realistic
•  I have identified and mitigated key project risks
•  I have a workforce skills development plan
•  My project budget separates eligible and ineligible expenditure

Application Quality

•  I have read the STS Round 2 Grant Opportunity Guidelines in full
•  My application directly addresses all four merit criteria
•  My supporting documentation is under 20MB total
•  I have included only requested attachments (no extras)
•  My application narrative is clear, concise, and evidence-based

Strategic Positioning

•  My project aligns with Australia’s 2030/2050 targets
•  I have demonstrated value for money (competitive abatement cost)
•  I have shown how my project prevents carbon leakage
•  My project contributes to regional development or workforce capability

If you answered “NO” to any eligibility question, stop and resolve it before proceeding. If you answered “NO” to readiness or quality questions, strengthen these areas before submitting.

What Happens After You Apply?

Understanding the post-submission process helps manage expectations:

1. Acknowledgment (within 24-48 hours): You’ll receive an automated email confirming receipt of your application.
2. Batch Assessment (3-6 months): Your application enters a competitive assessment process. The Assessment Committee (comprising experts from DCCEEW, industry, and technical fields) scores each application against the four merit criteria.
3. Notification: If successful, you receive a Letter of Offer via the business.gov.au portal. If unsuccessful, you receive a notification and can request feedback.
4. Grant Agreement Negotiation (4-8 weeks): You and the Department negotiate the final Grant Agreement terms, including milestones, reporting requirements, and payment schedule.
5. Project Commencement: Only after the Grant Agreement is executed can you commence eligible expenditure. Mark this date carefully.
6. Progress Reporting: You’ll submit regular progress reports (typically quarterly or aligned with milestones) demonstrating project delivery and emissions outcomes.
7. Financial Claims: Claim reimbursement as you incur eligible expenditure, subject to milestone achievement and reporting compliance.
8. Project Completion: Submit final report, independent emissions verification, and close out the grant.

The Bottom Line: Is STS Round 2 Right for Your Facility?

If you’re a trade-exposed industrial facility under the Safeguard Mechanism, STS Round 2 represents one of the most significant decarbonisation funding opportunities in Australia’s history.

You should apply if:

• Your facility faces increasing Safeguard compliance costs due to baseline decline rates
• You have identified viable decarbonisation technologies but face a financial viability gap
• Your industry is at risk of carbon leakage without support
• You’re committed to retaining industrial operations in Australia while reducing emissions
• You have the technical and financial capacity to deliver a capital project

You should wait or explore alternatives if:

• Your facility emissions are borderline (close to 100,000 tonnes threshold)
• You lack the 10% minimum cash co-contribution
• Your project timeline cannot accommodate 3-6 month assessment periods
• You’re in early-stage feasibility (not ready for capital deployment)
• Your proposed technology is unproven or speculative

Unsure of your eligibility? Check Your Eligibility Probability Here.

Related Resources on AustralianGrants.org

Maximise your grant success by exploring these complementary funding opportunities:

• Grants for Industrial Transformation Projects: Broader industrial decarbonisation funding, including the $400 million Industrial Transformation Stream (ITS)
• Funding for Green Energy Projects: Renewable energy grants for businesses outside the Safeguard Mechanism
• NSW Manufacturing Grants: State-level manufacturing support for NSW-based facilities

These programs can complement STS Round 2 by supporting different emission scopes, project types, or facilities outside the Safeguard Mechanism.

Conclusion: Your Pathway to $321 Million in Decarbonisation Funding

The Safeguard Transformation Stream Round 2 is open now, with $321 million available for trade-exposed industrial facilities ready to decarbonise. This is not a “first come, first served” program—it’s a competitive merit assessment where only the strongest applications succeed.

Your next steps:

1. Verify eligibility using the checklist above
2. Attend an information session (late February or early April 2025, register via PRF@dcceew.gov.au)
3. Develop your project plan with detailed emissions quantification and financial modelling
4. Engage technical validators (independent engineers, emissions verifiers)
5. Prepare your application addressing all four merit criteria with evidence-based responses
6. Submit via business.gov.au before your target batch closes

The Australian industrial landscape is transforming. STS Round 2 funding can position your facility at the forefront of this transition—reducing emissions, retaining competitiveness, and securing your operations for the net-zero future.

Don’t wait until the 20MB attachment limit becomes your biggest obstacle. Start preparing today.

Unsure of your eligibility? Check Your Eligibility Probability Here.