NSW Renewable Fuel Producers Must Meet Production Targets; Fines for Missing Targets

Electricity Supply Amendment (Renewable Fuel Scheme) Bill 2026

13 Oct 2026: MPs in the first house are debating whether this bill is a good idea in principle.

Legislative Assembly

Legislative Council

Assent

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Topics

criminal penalties electricity supply energy targets environmental protection fuel targets green hydrogen renewable energy renewable fuel

Introduced by: The Hon Jihad Dib MP (ALP)

Links to official parliament websites

Official page: progress through parliament

Effects of this bill

If this bill passes, it means that:

The Energy Minister can create two groups of renewable fuels: Group 1 for early producer green hydrogen, and Group 2 for green hydrogen and renewable methane (provided the methane is not made from native Australian timber).
Renewable fuel scheme participants must meet specific production targets for Group 1 and Group 2 fuels from 2027 up to 2044 by surrendering a set number of certificates to the Scheme Regulator.
Participants who fail to meet their renewable fuel targets must pay a financial penalty; for Group 1 fuels in 2027, the penalty rate is $17.50 per unit.
Participants can carry forward a shortfall to the next period to avoid a penalty, limited to 20% of the target for 2027 and 10% for other periods, though this is prohibited for the 2044 period.
The Energy Minister can approve changes to renewable fuel groups or targets, including reducing production targets for the first two years if certificates are unavailable and the loss is offset over the next five periods.
The Renewable Fuel Scheme Regulator must publish penalty rates on its website before each period begins and report the total number of certificates created and surrendered, broken down by certificate class.
The register for the renewable fuel scheme must record the specific class of each certificate, and participants must list their certificate targets and any shortfall penalties in their annual statement.
Scheme participants do not have to include gas in their 'liable use' if they buy and retire certificates under a government-approved framework.

The Debate

What different members said when this bill was debated:

Edmond Atalla ALP

“I make a brief contribution in support of the Electricity Supply Amendment (Renewable Fuel Scheme) Bill 2026. The bill represents an important step in building a cleaner, more secure and more resilient energy future for New South Wales. It recognises that reducing emissions and strengthening energy security are not competing objectives; they are two sides of the same challenge.”

Official source →

James Griffin LIB

“I make a brief contribution to debate on the Electricity Supply Amendment (Renewable Fuel Scheme) Bill 2026. I state at the outset that the Coalition will support the bill. It is sensible, well‑targeted legislation. It amends the Electricity Supply Act 1995 to expand the Renewable Fuel Scheme beyond green hydrogen to include biomethane.”

Official source →

Jihad Dib ALP

“I am pleased to speak in reply in debate on the Electricity Supply Amendment (Renewable Fuel Scheme) Bill 2026. Like the previous speakers, I will keep it fairly short. I thank all members who contributed to debate. I particularly thank the shadow Minister for Energy and Climate Change, the member for Manly. I again put on the record that he is an incredible person to have worked with.”

Official source →

News articles and press releases

Second Reading Debate, Electricity Supply Amendment (Renewable Fuel Scheme) Bill 2026

Edmond Atalla MP, Member for Mount Druitt — 2026-09-16

The Renewable Fuel Scheme was established in 2021 under the Energy Security Safeguard. Up to now, green hydrogen has been the only eligible fuel. The scheme operates through a market-based certificate system, creating an incentive for renewable fuel production while requiring gas retailers and self-contracting gas users to meet their share of the renewable fuel target. The bill expands that framework. It introduces renewable methane as an eligible fuel and establishes targeted support for early-mover green hydrogen producers. The first major reform is an early-mover green hydrogen target applying from 2027 to 2037, with a prescribed penalty rate of $17.50 per certificate, adjusted annually for inflation.