A major draft amendment to Energy Law lays down a comprehensive regulatory framework for the development of the Polish hydrogen industry, but does not introduce a dedicated support scheme.
The Ministry of Climate and Environment proposed a draft amendment to the Energy Law (the “Draft”) on 27 May 2024. The new legislation seeks to position hydrogen within the Polish energy law system by introducing a number of dedicated measures closely based on their counterparts in the RES and natural gas sectors.
At a glance
- Hydrogen recognized as a fuel under the Energy Law
- New rules for connecting hydrogen installation to gas and hydrogen networks
- Simplified licensing requirements for hydrogen production and trading
- New opportunities for investment in the Polish hydrogen sector
A new type of fuel
According to the Draft, hydrogen will become a separate type of fuel alongside solid, liquid and gaseous fuels. The Draft recognises three categories of hydrogen – renewable hydrogen, low‑emission hydrogen and renewable hydrogen of non-biological origin – potentially allowing for a different treatment of hydrogen projects depending on their classification in the future. Specific quality standards and parameters are expected to be regulated in government bylaws once the Draft is enacted.
Limited licensing requirements
Recognising the innovative nature of hydrogen technologies, the Draft will facilitate their development by excluding the production, transmission and distribution of hydrogen from the obligation to obtain a licence (Polish: koncesja). However, hydrogen storage will be subject to the licensing obligation in case of installations with capacity exceeding 55,000 Nm3. Similarly, hydrogen trading will require a licence provided that the annual turnover exceeds PLN 1,000,000 (EUR 240,000).
The use of existing natural gas infrastructure
The Draft assumes that until a dedicated grid is developed, hydrogen will be distributed by means of the existing natural gas pipeline infrastructure and subject to natural gas regulations. Therefore, it can be expected that the biggest players in the natural gas market – operators of the largest systems often owned by the State Treasury – will be at the forefront of the development of the Polish hydrogen economy. A so-called “negotiated” third-party access rule will apply to hydrogen transport companies, meaning that while they will be legally obligated to provide distribution and transmission services to hydrogen producers, traders and users, the terms of such transport agreements will be fully negotiable, which raises potential concerns related to the relative bargaining powers of established grid operators and new entrants.
No dedicated support scheme
The Draft appears to succeed in terms of setting out an initial regulatory framework for hydrogen. However, there are still no concrete proposals for a support scheme dedicated to the production of hydrogen, similar to the auction support scheme for renewable energy sources. Considering the high cost of developing and scaling up hydrogen installations, as well as a degree of uncertainty surrounding the hydrogen industry in recent months, it remains to be seen whether the Draft will be enough to kickstart the Polish hydrogen revolution. Nevertheless, it is a welcome step in the right direction and a potential opportunity for investment.
Next steps
The Draft is currently undergoing a formal assessment at the initial legislative stages and is still subject to change even before it reaches the Parliament, which is expected to happen within the coming months.
Should you have any queries or wish to obtain more information, please contact us or any of your other contacts at Linklaters.
For further information, please contact:
Patryk Figiel, Partner, Linklaters
patryk.figiel@linklaters.com
