The Renewable Fuel Scheme (RFS) was established under the Energy Security Safeguard and the NSW Hydrogen Strategy to encourage the production of green hydrogen in NSW.
Our aim is to support industry to grow new supply chains to improve the affordability, reliability and sustainability of green hydrogen in NSW. This will also help our industries remain competitive as international markets decarbonise and become global leaders in green hydrogen production.
Green hydrogen is hydrogen produced using renewable energy that does not produce emissions. In contrast, most hydrogen today is produced from natural gas.
Investing in the production of green hydrogen will help NSW shift to net zero emissions by 2050. It will also help us:
drive economic growth and create new jobs
improve air quality
improve our energy security
As currently designed, the RFS sets a target for green hydrogen production. The annual target will gradually increase to 8 million gigajoules (GJ) by 2030.
Like the Energy Savings Scheme (ESS) and Peak Demand Reduction Scheme (PDRS), the RFS is a certificate scheme.
Hydrogen producers can create certificates based on the amount of green hydrogen they produce and sell them to liable parties. Each certificate will represent 1 GJ of green hydrogen that is produced.
Liable parties under the scheme are natural gas retailers and large users that do not purchase gas through a retailer. The liable parties will need to buy and surrender certificates to meet their obligations.
The Renewable Fuel Scheme Rule
To develop the RFS rule, we consulted industry on the first draft between December 2023 and February 2024. We used the feedback we received during the consultation to develop an updated draft RFS rule.
Learn more about the public consultation process, the feedback we received and our current position on the proposals for the rule by reading these documents:
The RFS rule will be published in the NSW Government gazette before the scheme liability for green hydrogen starts.
Amendments to the existing RFS to align with industry development
Currently, the RFS has legislated hydrogen production targets for 2024 and 2025. To ensure the RFS aligns with industry developments, the Department intends to:
- In 2024, set a penalty rate for 2026 onwards.
- In 2025, lodge legislative amendments so the RFS can commence in 2026. This would mean liable parties won’t need to surrender certificates to meet 2024 and 2025 targets.
The targets and penalty rate are both published in Part 7A of the Electricity Supply (General) Regulation 2014.
Consultation on RFS expansion options
In August 2024, we consulted on the development of a new renewable fuel strategy for NSW. Part of this consultation included seeking feedback on whether the RFS should be expanded and have additional renewable fuels and liable parties. Visit the consultation page to stay updated on the outcomes.
Please email us if you would like more information at [email protected]
Learn more about the Renewable Fuel Scheme
Learn more about the RFS by reading our frequently asked questions (FAQs).
Get involved
We look forward to collaborating with industry through targeted research, stakeholder engagement and public consultation. We will provide regular updates about these activities on our website and via email.
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