Australia’s NSW may revise renewable fuels strategy

Australia's New South Wales (NSW) state could revise its renewable fuels strategy, in a move to help the state achieve its emission reduction goals and reach net zero by 2050.

The Labor party-led state government has released a discussion paper, seeking input on whether it should set or redesign existing mandates for using fuels like renewable diesel, sustainable aviation fuel and green hydrogen and its derivatives. Currently, the ethanol and biodiesel mandates state that volume fuel retailers must ensure that 6pc and 2pc of the total volume of petrol and diesel sold is ethanol and biodiesel, respectively.

Renewable fuels will be used in hard-to-abate sectors like aviation, manufacturing and heavy road transport as a replacement for fossil fuels. The government has opened the consultation with industry participants until 30 August, it said in a press release.

Renewable fuel producers have long argued that the poor enforcement of the mandates, coupled with poor loopholes, has hindered the sector's growth in both NSW and Queensland states.

The renewable fuels strategy will build on the existing NSW hydrogen strategy, the government said, to maintain support for hydrogen as a long-term abatement option while "expanding consideration to other renewable fuels for short and medium-term abatement."

Expanding the renewable fuel scheme (RFS)beyond green hydrogen may further boost the sector, by creating a market-based certificate scheme for other fuels that require liable parties to purchase certificates representing each gigajoule of fuel produced.

At present, the RFS legislates annual targets beginning at 7,417 t/yr in 2026, rising to 66,667 t/yr of green hydrogen by 2030. Gas retailers and large gas users that buy directly from producers must procure and surrender certificates to meet their share of the RFS's target or pay a penalty for a certificate shortfall, according to government policy.

Mandates for green ammonia use in mining operations and biodiesel blending for the transport sector may also form part of the renewable fuels strategy, the paper said, while the government could set requirements for renewable fuel purchases by its own departments.

NSW has ambitious plans for its green hydrogen industry, aiming for 2GW of electrolyser capacity by 2030, backed by electricity network charge concessions to decarbonise its ammonia, heavy transport and the agricultural sectors initially.

The government accepted planning applications for Australian utility Origin Energy's planned a 55MW Hunter Valley hydrogen hub near the city of Newcastle, which would sell 80pc of its output to Australian chemical and explosives firm Orica's nearby ammonium nitrate plant.

Origin plans to make a final investment decision on the project by late 2024.

The federal government is also funding studies into assisting the low-carbon liquid fuel industry, including options for production incentives and other measures to help its growth.

The NSW government plans to reduce emissions by 50pc of 2005 levels by 2030, 70pc by 2035 and net zero by 2050.

By Tom Major