RFS legislation

Legislation for the Renewable Fuel Scheme

This page explains the legal framework for the Renewable Fuel Scheme (RFS). The NSW Department of Climate Change, Energy, the Environment and Water (NSW DCCEEW) develops this framework. 

It includes: 

• Electricity Supply Act 1995 (the Act)
• Electricity Supply (General) Regulation 2014 (the Regulation)
• Renewable Fuel Scheme Rule of 2024 (RFS Rule).

The Act

The Electricity Supply Act 1995 (the Act) established the RFS under Electricity Supply Act 1995 No 94 - NSW Legislation.

Schedule 4A, Part 3, Division 1 of the Act sets out its legal framework. This includes IPART’s functions and responsibilities as Scheme Administrator and Scheme Regulator.

The Regulation

The Electricity Supply (General) Regulation 2014 (the Regulation) supports the Act. It provides additional details about some of the core functions of the Scheme Administrator and the Scheme Regulator. Part 7A of the Regulation sets out the RFS's annual green hydrogen target. 

Amendments to the RFS legislation

Amendments in 2025

The Government amended the Act and the Regulation to align the RFS with the anticipated start to green hydrogen production in NSW in November 2025.

 Key changes include:

• changing the RFS commencement date to 1 January 2027
• removing the 2024, 2025 and 2026 targets and penalty rates
• amending the 2027 target from 1,780,000 to 180,000 gigajoules.

These changes remove scheme participants’ obligations for the 2024, 2025 and 2026 compliance periods. See the NSW Climate and Energy Action website for further details about amended targets and penalty rates.

Based on these amendments, the key dates for scheme participants in their first compliance period (2027) are:

• 30 September 2027: scheme participants must notify IPART of their individual liable use for the 2027 compliance period. Liable use for 2027 will be based on scheme participants' gas use for 2026.
• 15 November 2027: IPART determines and publishes the scheme liable use for the 2027 compliance period.
• 1 March 2028: scheme participants must lodge their annual statement for their 2027 compliance period.

Amendments in 2026

The Government is committed to supporting hydrogen projects that are already progressing under the existing scheme and intends to make amendments to establish a target of up to 1 million GJ from 2027 to 2037 with a $17.50 penalty rate for first-mover green hydrogen projects.  

The Government also intends to make amendments so the RFS can support biomethane from 2028. This will include establishing a biomethane and green hydrogen target that increases to 8 million GJ by 2038 with a $10.50 penalty rate.

Once these amendments are passed in 2026, the scheme should have 2 targets:

• a 2027 to 2037 first-mover only green hydrogen target, increasing to 1 million GJ by 2030, with a $17.50 penalty rate
• a 2028 to 2044 biomethane and green hydrogen target, increasing to 8 million GJ by 2038, with a $10.50 penalty rate
• annual targets will be phased to account for expected production volumes, reaching a combined total of 8 million GJ by 2032. 

Updates

The NSW Government has published its Renewable Fuel Strategy, which delivers key actions to grow the NSW renewable fuel industry and help reduce emissions in sectors that are hard to decarbonise. Actions include expanding the RFS to include biomethane as an additional renewable fuel.

The Government intends to make further amendments to the RFS in 2026, which will include establishing 2 targets: 

• a 2027 to 2037 first-mover only green hydrogen target
• a 2028 to 2044 biomethane and green hydrogen target.

You can visit the NSW Climate and Energy Action website for further details.