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"Polish Hydrogen Strategy until 2030 with an outlook until 2040" - challenges and opportunities

  • Poland
  • Energy and infrastructure - Hydrogen

09-12-2021

Poland is one of the top hydrogen producers in Europe

Hydrogen as a raw material has been used for a long time in domestic industrial processes.

This is confirmed by the fact that Poland is currently in 3rd position among European hydrogen producers, just behind Germany and the Netherlands. Hydrogen production in Poland amounts to about 1.3 million tons1. However it needs to be emphasized, all of the domestic production mostly comes from fossil fuels and is carried out in large industrial plants by steam hydrocarbons reforming, where hydrogen is used in industrial processes.

The leader of hydrogen production in Poland is Capital Group Grupa Azoty S.A., which annually produces about 420 thousand tons of hydrogen (32,3% of domestic hydrogen production), followed by:

  • Koksownia Zdzieszowice sp. z o.o. and Koksownia Przyjaźń S.A. with a total production of 149 thousand tons/year (11,5% of domestic production),
  • PKN Orlen S.A. with a total production of 140 thousand tons/year (10,7% of domestic production),
  • Grupa Lotos with a total production of 59 thousand tons/year (4,5% of domestic production),
  • the remaining share of domestic hydrogen production (41%) comes from other producers.

The refining industry is one of the leading industries using hydrogen in the production process in Poland. Other industries for which hydrogen is produced are: ammonia, methanol and steel production.

Polish Hydrogen Strategy until 2030 with an outlook until 2040

The "Polish Hydrogen Strategy until 2030 with an outlook until 2040" (the “Strategy” or “Document”) was published on 7 December 2021 in the Official Journal of Laws2. The Strategy has been officially adopted by the resolution of the Polish government passed on 2 November 2021. The Document is part of global, European and national activities aimed at building a low-carbon economy, and will play a key role in the Polish energy transformation. Consequently, further actions established by the Strategy are focused on the development of green and low-emission hydrogen economy.

The Strategy outlines a forward-looking vision of national hydrogen economy, as well as setting out the main goals of hydrogen economy development in Poland and the activities which need to be taken in order to achieve climate neutrality and maintain competitiveness of the Polish economy. It specifies three key areas, which are industry, power generating sector and transport, six specific goals to be achieved and 40 tasks which, when completed, will enable us to become a society that benefits from hydrogen technologies.

Poland by 2030 in particular plans to reach 2 GW of installation capacity for the production of hydrogen and its derivatives from low-carbon sources, processes and technologies, including in particular electrolyser installations, as well as 800-1000 hydrogen-fuelled buses and at least 32 refuelling stations and five hydrogen valleys.

The Strategy defines six fundamental objectives to achieve the development of national competences and technologies for building a low-emission hydrogen economy:

  • Objective 1 - implementation of hydrogen technologies in the energy and heat sector
  • Objective 2 - use of hydrogen as an alternative fuel in transport
  • Objective 3 - supporting the decarbonisation of the industry
  • Objective 4 - production of hydrogen in new installations
  • Objective 5 - efficient and safe transmission, distribution and storage of hydrogen
  • Objective 6 - creating a stable regulatory environment

The activities for the implementation of these objectives are intended to take advantage of Polish technological, scientific and research resources, and potential in the field of modern hydrogen technologies in the creation of a Polish hydrogen industry. Taking into consideration the assumptions adopted in the Strategy, as well as potential for domestic hydrogen production and use, the importance of the legal regulations and market standards designed by the Ministry of Climate and Environment in cooperation with industry and science organizations in developing hydrogen technologies should be recognised. A stable legal framework will need to create the expected incentives for the use of hydrogen-based solutions, and facilitate investment throughout the entire hydrogen supply chain (equipment manufacturers, infrastructure providers, vehicle manufacturers, etc.).

In line with the Strategy the creation of stable regulatory frameworks should remove barriers to the development of the hydrogen market and encourage the gradual increase in the use of RES (renewable energy sources) for electrolysis.

In order to create a regulatory framework which makes hydrogen a viable alternative fuel for transport and regulations specifying the details of how the market will operate, it is planned to develop a hydrogen legislative package, which will include the revision of the related legal acts, in particular: Energy Law, Act on electromobility and alternative fuels, Act on the system of monitoring and controlling quality of liquid fuels and liquid biofuels, Construction Law, Act on renewable sources of energy, Environmental Law, Water Law. Most likely, the required regulations will be changed through the adoption of a new law - Hydrogen Law, which will comprehensively and in one place regulate the operation of the hydrogen market.

The adopted Strategy assumes that in the period between Q3 2021 and the end of 2023 legislative action will be taken to:

  • provide a regulatory framework for the operation of hydrogen as an alternative fuel for transport
  • develop a hydrogen legislative package that lays the foundations for a functioning market
  • develop legislation setting out the details of how the market will operate (a separate package), implementing EU law in this area and implementing a system of incentives for the production of low-emission hydrogen

The implementation of the Polish Hydrogen Strategy until 2030 requires the allocation of approximately PLN 0.93bn (approximately EUR 201m) by 2025 and another PLN 10.81bn (approximately EUR 2,34bn) by 2030, bringing the total required investment to more than PLN 11bn. Antecipated expenditure in this period will include hydrogen technologies in the energy, transport, and production sectors.

The Strategy provides for funding sources both from national and EU sources, as well as dedicated programs including:

  • Hydrogen Technologies Support Programme (2021) under the National Centre for Research and Development (Narodowe Centrum Badań i Rozwoju/ NCBR). This programme in particular aims to provide financial and technical support for hydrogen valleys feasibility studies and preparing for and announcing new financial programmes provided by POIR+ and national funds. 
  • New Energy Programme (2021) under the National Fund for Environmental Protection and Water Management (Narodowy Fundusz Ochrony Środowiska i Gospodarki Wodnej/ NFOŚiGW) to support Polish entrepreneurs in launching technologies in relation to the production and storage of zero-emission hydrogen, as well as its use in transport.
  • Green Public Transport Programme (Phase I in 2021), which aims to reduce emissions produced by the public transport sector by increasing share of BEV (battery electric vehicle) and PHEV (plug-in hybrid electric vehicle) buses. 
  • The Hydrogenation of the Economy Programme (2021) under NFOŚiGW will be dedicated to business, research and academic institutes as well as public administration in order to commission innovative hydrogen technologies projects. 
  • The Support for electric vehicle charging and hydrogen refuelling infrastructure (2021) under NFOŚiGW will be dedicated to local governments, entrepreneurs, housing associations, housing communities and individual farmers. 

The Strategy assumes that, inter alia, with the application of support mechanisms, the demand for green hydrogen will grow. It is also expected that the growing popularity of hydrogen, also on a global scale, will result in a decrease in its price and an increase in its market attractiveness. As a consequence, this may lead to a further increase in demand and create needs to expand production capacity.

Additionally, it should be noted that the Strategy does not address the issue of the future model of the green hydrogen market and its exact structure. The Strategy does not contain, for example, an explicit declaration that the future hydrogen market will be based on a liberalised gas market model. Thus, the issue of the price formation mechanism for hydrogen remains to be resolved, including whether it will be based on a market mechanism, e.g. on an exchange, or whether the price will be formed within a strict regulatory framework supervised by a market regulator.

At the same time the Document presents the main technological and business obstacles that could hinder the development of green hydrogen in Poland. The key challenges for the Polish Government regarding the establishment of this Strategy will be:

  • competitiveness
  • market regulations
  • measures of financial instruments supporting market development
  • underdeveloped market 
  • high production costs
  • infrastructure limitations
  • ensuring quality and safe transmission and distribution system
  • integration into the common European infrastructure

Given the foregoing, an important element in overcoming the barriers is the need for support and ongoing investment in research, development and deployment of new solutions to further reduce the costs and increase the overall efficiency of production, transport and storage systems. This, in turn will help to reduce the end-use costs of hydrogen, giving it a competitive edge in the overall energy market. For this purpose, pilot and demonstration projects are needed for full deployment, to best match future regulations with actual market conditions and needs.

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1. Polish Hydrogen Strategy until 2030, with an outlook until 2040 (page no. 7).

2. Resolution no. 14 of the Council of Ministers dated 2 November 2021 on the adoption of Polish Hydrogen Strategy until 2030, with an outlook until 2040 (the Official Journal of the Republic of Poland dated 7 December 2021, position 1138).