The government wants to fund clean energy projects and create new jobs under its Future Made in Australia package.
In a submission to a parliamentary inquiry, the Business Council of Australia warns "firm guardrails" should be put in place to ensure the policy is successful and taxpayer dollars aren't wasted.
"There must be suitable 'off ramps' - the scope to withdraw, or limit, funds based on outcomes being missed or achieved," its submission reads.
"We must not invest in projects that can stand alone from the outset with private investment, or those which will never stand alone without government support."
The net-zero transition will require Australia to become flexible and adaptable to attract investment, the business council will tell a public hearing on Wednesday.
Ai Group has suggested six key reforms to ensure the manufacturing plan is successful, including a provision for greater immediacy in delivering policy and investment outcomes
The current package lacks a "sufficient degree of policy certainty to achieve its outcome of encouraging private investment", it added.
In its submission, the Australian Council of Trade Unions said the transition to net-zero could create up to two million new direct jobs by 2050.
"Considering the scope of economic opportunities of the transition and the motivation behind ambitious industrial policies across peer economies, the ... bill represents the right, proven approach to modern industrial policy that would be foundational in creating the next generation of Australian jobs," it reads.
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