Part 2

Hy-Politics – political considerations shaping the evolution of clean hydrogen policy

Summary of the use case in Poland

Poland is currently in the process of developing a national hydrogen strategy. In January 2021, the Polish Ministry of Climate and Environment published a draft Polish Hydrogen Strategy until 2030, with a perspective until 2040. The Polish government notes that hydrogen can play a crucial role in achieving climate neutrality and values its potential application in energy storage and low-emission transport solutions.

At present, about 1 million tonnes of hydrogen is produced annually in Poland. However, this is mainly hydrogen produced from fossil fuels by petroleum and chemical plants for their own use.

The ambition of the Polish government is to develop strong national and local competencies with regard to key components of the modern hydrogen technologies value chain. To achieve this, it will be necessary to develop electrolysers and fuel cell installations, a distribution network, hydrogen storage facilities and refuelling infrastructure. In the perspective for 2040, it would be possible to start manufacturing hydrogen in nuclear power plants, although the development of nuclear energy in Poland is still at the early, conceptual stage.

According to the draft Polish Hydrogen Strategy, the installed capacity of electrolysers will reach 2 GW by 2030, setting annual hydrogen output at 6415 GWh.

The document sets six general objectives and 40 specific actions to position Poland in the hydrogen revolution.

The six core objectives are:

1. Implementing hydrogen technologies in the energy sector

Hydrogen has a high energy density and allows for a relatively long storage period. Its use in the energy sector is expected to enable a better utilisation of the RES (and future nuclear) capacity and increase the flexibility of the system. Hydrogen can improve national energy security – the use of electrolysers will allow integration of the gas system with the power grid, leading to a reduction in the dependence on mainly foreign-sourced fossil fuels. To achieve these objectives, the draft Strategy proposes:

  • commissioning a small power-to-gas installation (to be developed on the basis of Polish technology);
  • supporting R+D in the area of co- and polygeneration systems to create demonstration plants followed by medium-sized plants; and
  • launching the use of hydrogen for energy storage (also through the use of large-scale salt caverns).

2. Using hydrogen as an alternative fuel for transport

High energy density, a fast refuelling process and the possibility of using the existing gas station infrastructure are indicators of the great potential of hydrogen for replacing fossil fuels, especially in urban, heavy or long-distance transport. Opportunities for hydrogen use include not only the automotive sector but also (or perhaps even primarily) aviation, rail and maritime transport. The draft Strategy envisages:

  • creating conditions to enable the use of 500 hydrogen (FCEV) buses produced in Poland by 2025 (and 2000 such buses by 2030);
  • constructing 32 hydrogen charging stations by 2025;
  • constructing the first hydrogen trains/locomotives; and
  • producing synthetic fuels through the reaction of hydrogen with CO, CO2, N2.

The Government intends to launch pilot programmes for the use of hydrogen in HGV, rail, maritime and inland water transport in the near future.

3. Supporting the decarbonisation of industry

Some heavy industry sectors (including steel, refining and chemical) still benefit from discounted CO2 allowances, but this may change in the future. The use of hydrogen may allow for a significant reduction in greenhouse gas emissions and well-tailored hydrogen support schemes should help to keep production competitive.

In the long term, it will also be important to shift from producing hydrogen from fossil fuels (the entire production in Poland of approximately 1 million TPA) to low-carbon or renewable hydrogen production.

Measures to achieve this objective will be based on:

  • supporting the development and use of low-carbon hydrogen for petrochemical and fertiliser production processes;
  • introducing a carbon contract for difference (as an instrument to support the climate transformation of industry); and
  • providing financial and organisational support for feasibility studies on industrial hydrogen valleys (as part of the construction of circular industrial processes) and the eventual establishment of at least five hydrogen valleys with a significant hydrogen transmission infrastructure component.

4. Producing hydrogen in new installations

Poland’s strategic goal until 2030 is to provide conditions for launching installations to produce hydrogen from low and zero emission sources. Development incentives are planned to be introduced to complement the funds offered by the EU.

The draft Strategy provides for:

  • commissioning facilities to produce hydrogen from low-carbon sources using various technologies (e.g., the production of hydrogen from natural gas using CCU/CCS, i.e., carbon capture technologies);
  • launching the production of synthetic gases using the hydrogen methanation process;
  • using RES capacity to produce hydrogen and synthetic fuels based on the electrolysis process (the installed capacity of electrolysers will reach 2 GW within a decade); and
  • ensuring conditions for the construction of hydrogen production facilities at nuclear power plants (when built).

5. Enabling efficient and safe transmission of hydrogen

It is possible to transmit hydrogen in existing natural gas pipelines, as long as they are adapted for the transfer of hydrogen additives. It is also possible to transport hydrogen by truck and train. The draft Strategy adopts fairly general objectives, namely:

  • the progressive development of hydrogen transmission and distribution networks; and
  • injection of synthetic gases produced in power-to-gas systems into the gas network.

Among the specific actions under this objective, the Strategy indicates that by 2025 an analysis will have been conducted of the optimal form of energy transfer (from the perspective of the development of the hydrogen economy). It is also envisaged that by 2030 the ability to transport through gas networks a mixture containing 10% of gases other than natural gas should be achieved.

6. Creating a stable regulatory environment

The last element of the Strategy will be to create a regulatory framework for the hydrogen market as well as for the functioning of hydrogen as an alternative fuel in transport. A hydrogen package is planned for adoption next year, which would also incorporate respective EU regulations.

Certain regulatory issues need to be resolved as currently: (i) Polish energy law does not mention hydrogen as a type of fuel, (ii) the technical and safety conditions relevant to hydrogen production and transmission have not yet been established, (iii) we do not know the assumptions for the hydrogen support system.

 

Part 4

Hy-Achieving – creating a suitable incentive regime

The regulatory framework for hydrogen in Poland is in the early stages of development, and the incentive scheme for development of hydrogen-based technologies has not been adopted yet.

The Polish government estimates that in the 2030 perspective, the required capital expenditures will amount to PLN 14.8 billion (€3.2 billion), but also notes that hydrogen-based projects will have to compete for financing with IT and chemistry programmes. Plans for several funding programmes focused on hydrogen projects were announced in the Polish National Hydrogen Strategy. From 2021 onwards, the government plans to spend PLN 2.5 billion (€0.5 billion) across multiple funds, such as:

  1. A long-term hydrogen R&D development support scheme – PLN 100 million (€21 million) each year between 2022 and 2026.
  2. Support Scheme for Hydrogen Technologies of the National Centre for Research and Development. This programme will provide both financial and organisational support for feasibility studies on industrial hydrogen valleys as well as prepare and successively announce research funding programmes based on a separate fund of the Smart Development Programme and national resources. The anticipated value of this fund is PLN 1 billion (€0.2 billion).
  3. Two recently announced support schemes provided by the National Fund for Environmental Protection and Water Management: “New Energy” and “Green Public Transport (Phase I)”; the hydrogen components of these plans are worth PLN 920 million (€200 million) combined.

    In addition to incentives schemes tailored specifically for developing hydrogen strategies, there are a number of more general funds and programmes that may serve a similar purpose. These include initiatives such as the Infrastructure and Environment Operational Programme and programmes of the Polish Development Fund. In addition, certain opportunities are likely to arise in the field of public procurement. Despite strong governmental support, there is still plenty of room for outside funding of hydrogen-based projects in Poland. It is also assumed that EU measures will have a major impact on the development of the hydrogen economy.

 

Part 5

Hy-ly Volatile? making it safe, sustainable and transportable

The regulatory framework for hydrogen-based technologies is in the early stages of development, although a whole legislative hydrogen package is planned for 2022.

At the moment, Polish energy law does not mention hydrogen as a type of fuel. In addition, no technical and safety conditions relevant to the production and transmission have been established. Detailed assumptions of the hydrogen support system are unknown, and hydrogen certification procedures and authorities are still not in place. However, the government is currently working on all these areas and we can expect more precise information in the coming months.

The Polish government is currently proceeding with a bill to amend Poland’s Fuel Act to include hydrogen as a vehicle fuel. The bill was generally well received by the industry and is expected to be adopted later this year.

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