AGL Energy welcomes the opportunity to contribute to the NSW Renewable Fuel Scheme discussion paper on rule development.

The NSW Renewable Fuel Scheme was established in 2021 with little prior consultation from stakeholders. Developed as part of the NSW Hydrogen Strategy under the NSW Energy Savings Scheme, the framework of the scheme was legislated in December 2021 without a public consultation on the relative merits of a retailer-led certificate scheme to incentivise green hydrogen production compared to other possible options.

At the same time, critical elements of the scheme that will impact on costs for gas users in NSW, such as the scheme targets, eligible activities, limits on pass through costs to small business and users, and scheme liability, were also legislated. There is now little opportunity to discuss the best approach to incentivising renewable gas production in NSW while minimising costs on gas customers.

While several fundamental elements of the scheme have already been legislated, there is still significant work to be done to finalise how the scheme will operate and impact gas customers. Prior to its commencement in 2024, the government should therefore make the following critical policy decisions, which support the objectives of the scheme while ensuring costs on customers are minimised:

1. Include a price cap on certificates, which will act as a ceiling on overall scheme costs and minimise price rises for gas users in NSW.
2. Include biomethane and other renewable gases under the scheme, to ensure the broadest range of renewable fuels can be developed to decarbonise NSW gas networks at the lowest cost to customers.
3. Allow appropriate time for retailers to adjust to the scheme, given that pass-through costs are currently unclear and may take some time to feed through into the retail tariffs.

A copy of AGL’s submission to the Renewable Fuel Scheme consultation is available here.