Victoria
New South Wales
South Australia
QueenslandEcovantage applauds NSW Government’s biomethane inclusion in the Renewable Fuel Scheme – a game-changer for gas decarbonisation.
Ecovantage strongly welcomes the NSW Climate and Energy Action’s decision to expand the NSW Renewable Fuel Strategy, released on Friday 21 November 2025, to include renewable fuels such as biomethane, in addition to green hydrogen, from 2028. This aligns with the position Ecovantage has consistently advocated for in consultations, in the NSW Renewable Fuel Scheme as well as Victoria’s Gas Substitution Roadmap and the federal GO scheme.
Biomethane is a crucial fuel for the transition to net zero. As a “drop-in” fuel, it is chemically identical to fossil gas, meaning it can replace it within existing gas networks and equipment without any modifications. Given that Australia lags behind global efforts in this technology by several decades, a comprehensive plan to tackle industrial decarbonisation is long overdue.
The Renewable Fuel Scheme (RFS) was established in 2021 and initially focused solely on green hydrogen. Similar to other certificate schemes across Australia, the RFS allows renewable fuel producers to create one certificate for every gigajoule (GJ) of renewable fuel produced. Liable parties must then acquire and surrender these certificates to meet their mandated renewable fuel production targets or face a penalty. This mechanism provides a vital financial incentive, supporting the commercial viability of renewable fuel projects.
The NSW Government will introduce legislation to incorporate biomethane into the RFS from 2028. This expansion includes setting a combined biomethane and green hydrogen target, which will grow to 8 PJ by 2038, with a penalty rate of $10.50 per certificate shortfall. Producers using eligible production methods for these fuels will be able to generate and sell certificates at the market rate. The liable parties under the expanded scheme will be gas retailers and large gas users who procure gas directly.
The NSW Renewable Fuel Strategy outlines 20 actions that will be taken by the NSW Government to support hard-to-abate sectors. These actions range from building demand and support through funding and case studies to optimising infrastructure and supply chains, providing value to communities, fostering innovation, and enabling industry through reviewing regulations and standards.
Actions specifically aimed at supporting biogas and biomethane include:
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- Allocating up to $40 million to funding biohubs to accelerate biomethane production.
- Establishing a biohub demonstrator project on a NSW Government-owned asset.
- Produce a gas network load and distribution analysis to determine whether the gas network may need adapting to support widespread biomethane injection.
These actions will send a clear signal to the market, indicating that biomethane projects are a sound investment.
While there are no strict timelines outlined in the NSW Renewable Fuel Strategy, the decision to expand the scheme to include biogas and biomethane from 2028 is applauded. Hopefully, the other renewable energy schemes are taking notice!
Arlen East | Energy & Carbon Technical Manager
Arlen is a certified energy manager specialising in state and Federal-based energy efficiency schemes, helping clients unlock funding in a range of energy efficiency projects through Measurement & Verification.
