INSIGHT: Fuel for growth - unlocking industrial productivity through NSW’s Renewable Fuel Strategy
- A2EP
- 4 days ago
- 2 min read
21 January 2026
By Bronwyn See
Program Manager – Bioenergy, A2EP
At the end of 2025, the NSW Government unveiled its Renewable Fuel Strategy, which sets out a roadmap to help industry access low‑emissions fuels and stay competitive through the energy transition. For Australia’s industrial base - especially energy‑intensive manufacturers, miners, chemical producers and food processors - the strategy is highly relevant. These sectors account for around 19% of NSW’s emissions, and many rely on high‑temperature heat or fossil‑gas feedstocks where electrification isn’t yet practical.
What it means for energy productivity and decarbonisation
NSW’s plan is built around three priorities:
Lowering costs.
Ensuring fuel security.
Improving reliability.
These are the fundamentals of industrial productivity and several measures in the Strategy directly target them:
Expanding the Renewable Fuel Scheme (RFS) to include biomethane from 2028, with a legislated target of 8 PJ by 2038. A certificate system will help close the price gap with fossil fuels.
$40 million in funding for biohubs at wastewater plants, food processors and regional precincts - reducing transport distances for feedstock and cutting delivered fuel costs.
Up to $130 million under the Net Zero Manufacturing Initiative to support feasibility studies, early‑stage technology and commercial‑scale renewable fuel plants.
Investment in supply‑chain infrastructure such as compressors, feedstock processing and storage facilities.
Together, these supports tackle the two biggest hurdles for industry: price and availability at scale.
The government’s target of 15% renewable gas use in industry by 2035 sends a clear signal for long‑term planning and investment.
What’s in - and what’s missing
The strategy delivers several high‑impact measures, including:
Expansion of the RFS to biomethane from 2028.
$130 million in funding for renewable‑fuel production and supply‑chain infrastructure.
$40 million for biomethane biohubs near industrial users.
A government‑led biohub demonstration project to prove circular‑economy pathways.
Demand‑side support through fleet trials and disclosure requirements.
But some elements industry had hoped for are absent. The strategy doesn’t spell out liability rules or certificate allocation mechanics for the expanded RFS, leaving uncertainty about cost impacts on large gas users. Nor does it provide a clear pathway for system upgrades to enable widespread biomethane injection. Long‑term regulatory signals for hydrogen standards, blending limits, industrial conversion timelines and broader renewable‑gas mandates are also missing. These issues are expected to be addressed in the forthcoming NSW Gas Plan.
What businesses should do now
For industrial operators, the message is clear: start planning for renewable fuels. That means assessing fuel‑switch opportunities for medium‑ and high‑temperature heat, planning equipment investment cycles with hydrogen‑ready or biomethane‑compatible systems, exploring regional partnerships in biohub projects and tightening certification and emissions accounting processes as disclosure rules evolve.
The bottom line is that NSW is building a renewable fuel market designed to support industrial productivity while decarbonising. For industry, this represents both a risk‑management tool and a competitive advantage.
