General information
The Renewable Fuel Scheme (RFS) is a key action of the NSW Renewable Fuel Strategy. It was established under the Energy Security Safeguard and the NSW Hydrogen Strategy
The RFS is a certificate scheme. Its objective is set out in the Electricity Supply Act 1995.
The RFS currently supports green hydrogen production. We intend to make amendments in 2026 so the RFS can support biomethane from 2028.
Administration
The RFS will commence on 1 January 2027.
The RFS currently sets a target for green hydrogen production. The target for each compliance period is set out in the Energy Legislation Amendment Bill 2025.
| Compliance period | Target (GJ) | Tonnes* | Megawatt equivalent** |
|---|---|---|---|
| 2027 | 180,000 | 1,500 | 10 |
| 2028 | 3,200,000 | 26,667 | 190 |
| 2029 | 5,330,000 | 44,417 | 317 |
| 2030-2044 | 8,000,000 | 66,667 | 476 |
* Estimated based on the lower heating value of hydrogen at 120 GJ/tonne.
** Estimated assuming 140 tonnes per year per megawatt electrolyser capacity.
Liability
Liable parties are natural gas retailers and large users who procure their gas directly (not by purchasing gas through a retailer).
A liable party’s liability under the scheme for a compliance period is calculated based on its share of total liable gas use in NSW in the previous calendar year. Liable gas use is set out in clause 154 of Schedule 4A to the Electricity Supply Act 1995.
For example, if total liable gas use in NSW in 2027 was 1 million GJ and a gas retailer sold 10% of the total liable gas use in 2026, their scheme liability in 2027 would be 10% of the 2027 green hydrogen target. This would be equal to 18,000 certificates. Any use of green hydrogen or renewable methane as a component of the gas is not included in the liable use.
Liable parties must comply with their obligations set out in Part 3 of Schedule 4A to the Electricity Supply Act 1995.
The following timeline indicates liable parties’ obligations in 2027:
- by 30 September 2027 at the latest, liable parties must report their liable gas use in the 2026 calendar year
- by 15 November 2027, the Independent Pricing and Regulatory Tribunal (IPART) will sum these reported values and publish the total liable gas use in NSW
- by 1 March 2028, liable parties lodge annual statements and surrender certificates.
Liability is based on gas consumption in the previous calendar year so that it can be calculated within a reasonable timeframe. There is a delay between gas use and the final reporting of gas data, with revisions occurring up to 9 months later.
If a liable party does not surrender enough certificates to meet its liability, it will have a certificate shortfall. The shortfall is the difference between the liable party’s individual certificate target and the number of certificates it surrenders against the target. A liable party can elect to carry forward a shortfall to the next compliance period or pay a penalty.
Clause 165 of Schedule 4A to the Electricity Supply Act 1995 sets out the maximum amount of a shortfall that may be carried forward.
Penalties are calculated by multiplying the number of certificates in the shortfall (after accounting for a carry forward) by the penalty rate.
No. To enable liable parties to plan for their scheme obligations, no exemptions are proposed.
Renewable Fuel Certificates
Renewable fuel producers can create a certificate for every gigajoule of renewable fuel they produce. The renewable fuel must meet the eligibility requirements set out in the scheme rule.
Certificates can be created after the scheme rule is published in the NSW Gazette.
Certificates can be created up to 6 months after the end of the compliance period in which the renewable fuel was produced. This means that for green hydrogen produced in the 2027 compliance year, certificates can be created up to 30 June 2028.
Certificates can be sold by accredited certificate providers through bilateral arrangements with liable parties, or through the services of a third party.
Whenever a sale or trade occurs, the transfer of ownership must be registered on IPART’s online system, known as TESSA, in accordance with the requirements of the Electricity Supply Act 1995 and the Electricity Supply (General) Regulation 2014.
For more information on the certificate registry, you can read IPART’s website.
No. There is no minimum price. The penalty rate will act as a maximum price.
Certificates can only be used to meet liability under the RFS. They cannot be used to claim the purchase or use of renewable fuel. This eliminates the potential for double counting environmental benefits by end users and liable parties who purchase certificates for compliance purposes.
Certificates remain in force for 3 years from the date of registration or until surrendered.
Further information
Please email us if you have any further questions, email us at [email protected].