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 gradually increases to 8 million gigajoules (GJ) by 2030.
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 consultation is now open
We are currently seeking feedback on the first rule for the RFS. It sets out the calculation methods and eligibility requirements to create certificates for green hydrogen production.
The final Renewable Fuel Scheme Rule is expected to be published in Q2 2024. A position paper detailing the final positions of the Renewable Fuel Scheme Rule will also be published in 2024.
Liability will commence in 2025
Liability for the scheme will now commence in 2025. This means liable parties will not need to surrender certificates to meet 2024 targets. The 2025 target is 360,000 GJ, equating to 360,000 certificates. The target will be divided between liable parties based on their share of total liable gas use in NSW.
The 2025 penalty rate is $17.50 per certificate. Assuming a company tax rate of 30%, this equates to a tax-effective penalty rate of $25 per certificate.
The targets and the penalty rate are both published in Part 7A of the Electricity Supply (General) Regulation 2014.
Scheme expansion options
We are currently investigating options to expand the Renewable Fuel Scheme to include additional renewable fuels and liable parties. We intend to consult publicly on expansion options in mid-2024.
Please email us if you would like more information at [email protected].
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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