Focus on: HYDROGEN LAW IN THE PRACTICE OF THE ENERGY SECTOR: KEY REGULATORY CHANGES AND CHALLENGES

Economic and Climate Context of Hydrogen Market Development

Hydrogen-related business activities, including production, storage, and trade, constitute a significant branch of the Polish economy.

Poland is among the leading hydrogen producers in the European Union, following Germany and the Netherlands. According to the Polish Economic Institute, Poland produces approximately 1.3 million tonnes of hydrogen annually, accounting for over 13% of the EU’s total production. However, most of this hydrogen is generated through fossil fuel processing, resulting in high-emission “grey” or “black” hydrogen.

In contrast, the European Commission’s Hydrogen Strategy for a Climate-Neutral Europe (July 2020) prioritizes the development of renewable hydrogen. This form is produced via water electrolysis powered by renewable electricity, or alternatively through biogas reforming or biochemical conversion of biomass, provided sustainability standards are met. Currently, renewable hydrogen constitutes no more than 5% of production in both Poland and the broader EU.

The objectives of the European Hydrogen Strategy align with Poland’s Hydrogen Strategy to 2030 (with a perspective to 2040), adopted by the Council of Ministers. Both strategies aim to facilitate the EU’s transition toward a decarbonized economy, with hydrogen envisioned as a low-emission energy carrier and storage medium. A robust hydrogen infrastructure is therefore essential.

Key Elements of the EU Hydrogen Strategy

The EU’s Hydrogen Strategy outlines a phased development approach:

• Phase I (2020–2024): Establish production capacity of 1 million tonnes per year. Focus areas include increasing renewable hydrogen supply, fostering industrial-scale demand (especially in heavy industry and chemicals), and creating a regulatory framework with investment incentives and state aid rules.
• Phase II (2025–2030): Expand production to 10 million tonnes annually. Hydrogen is expected to contribute to energy system balancing. This phase emphasizes large-scale storage, hydrogen valleys, and refuelling station networks.
• Phase III (2030–2050): Target technological maturity and hydrogen integration into hard-to-decarbonize sectors. Greater reliance on renewables is anticipated, requiring further investment in generation capacity.

The REPowerEU plan, introduced in May 2022, complements the EU hydrogen roadmap. It sets a combined target of 20 million tonnes of renewable hydrogen (10 million produced domestically and 10 million imported) by 2030. REPowerEU aims to accelerate energy independence from Russian fossil fuels and expedite the green transition.

The 2023 Green Deal Industrial Plan introduced the European Hydrogen Bank to coordinate EU funding, conduct hydrogen auctions, and support imports and international production through financial instruments.

Notably, the EU defines “green hydrogen” strictly as electrolytic hydrogen powered by renewables. This differs from the U.S., which considers “clean hydrogen” to include hydrogen from fossil fuels, provided emissions stay below defined thresholds. In 2022, green hydrogen production in the EU was approximately 15,000 tonnes, compared to 123,400 tonnes of clean hydrogen in the U.S.

Main Assumptions of the Polish Hydrogen Strategy

Poland’s Hydrogen Strategy (October 2021) identifies hydrogen as a key tool for energy storage and for decarbonizing sectors where electrification is impractical or cost-prohibitive. Transport, particularly urban and long-distance road transport, is a priority area.

Six strategic objectives are defined: 1. Implementation of hydrogen technologies in energy and heating; 2. Use of hydrogen as an alternative transport fuel; 3. Support for industrial decarbonization; 4. Hydrogen production in new facilities; 5. Efficient and safe hydrogen transport, distribution, and storage; 6. Creation of a stable regulatory environment.

The development of “hydrogen valleys,” integrating the entire value chain regionally, is central. This requires skilled professionals, prompting initiatives in higher education and worker reskilling, especially in mining regions. Poland’s approach aligns closely with EU strategies, including the European Green Deal.

Recent Amendments to Polish Energy Law on Hydrogen

The Act of 21 November 2024 amending the Energy Law introduced key legal definitions and regulatory frameworks for hydrogen-related activities. Effective from 20 January 2025, these changes aim to harmonize Polish law with the EU hydrogen strategy.

Hydrogen is now formally categorized as a fuel. Article 3(3) of the Energy Law defines fuels to include solid, liquid, gaseous fuels, and hydrogen. Hydrogen may be blended with natural gas and transmitted via gas networks. However, the act refrains from legally defining “hydrogen,” considering it self-explanatory, while introducing distinctions for “renewable hydrogen” and “renewable hydrogen of non-biological origin” to enable preferential treatment aligned with the EU’s “do no significant harm” principle.

New definitions critical for infrastructure development include: – Hydrogen transmission network (Art. 3(77)); – Hydrogen distribution network (Art. 3(78)); – Hydrogen system (Art. 3(80)); – Hydrogen transmission and hydrogen distribution (Arts. 3(82), 3(83));

These concepts mirror traditional electricity and gas regulation and support the creation of transmission and distribution operators for hydrogen.

Hydrogen delivery requires grid connection and applicable contracts: a hydrogen sale agreement, transmission or distribution agreement, and, if relevant, a storage agreement. A comprehensive agreement may consolidate these. Article 7(1) mandates non-discriminatory grid connection by hydrogen network operators if technical and economic conditions allow. Fees are based on actual connection costs. The Energy Regulatory Office arbitrates disputes.

The amendment also authorizes the Minister of Energy, in coordination with the Minister of Climate, to define by regulation the technical parameters of hydrogen trading, transmission, distribution, storage, and quality. This regulation was pending as of the publication date.

Concession Obligations for Hydrogen Market Participants

Under Article 32(1), hydrogen production does not require a license. Licenses are, however, mandatory for: – Hydrogen storage (excluding local facilities); – Hydrogen transmission and distribution; – Hydrogen trading exceeding an annual value of EUR 10 million.

Exemptions apply for trading on commodity or regulated markets, and for electricity production from low-carbon or renewable hydrogen. These measures aim to encourage SME participation and reduce administrative burdens.

Entities operating hydrogen storage or trading businesses before the law’s effective date must apply for a concession by 20 July 2025. Applications are submitted to the Energy Regulatory Office per Articles 33 and 35. Noncompliance may result in penalties of up to 2,500 daily fines or imprisonment (3 months to 5 years) under Article 57g(1a).

Assessment of Legal Alignment with EU and National Hydrogen Strategies

The 2024 amendment reflects strong alignment with EU hydrogen policies. By supporting preferential forms of hydrogen (renewable, low-carbon), exempting production from licensing, and facilitating small-scale storage and trading, the Polish framework promotes investment and innovation.

Crucially, Poland’s legislative model preserves consistency with EU rules while creating legal certainty for market actors. However, further alignment with upcoming EU acts—such as the Hydrogen and Decarbonised Gas Market Package and delegated acts under RED III—will be vital to ensure long-term cohesion.

Summary

Hydrogen represents a high-potential pillar of the global energy transition. Alongside the EU, countries such as the U.S., China, and Japan are making strategic investments. Realizing hydrogen’s promise requires a regulatory environment that balances legal precision with flexibility for innovation.

Recent legislative steps in Poland reflect a thoughtful and forward-looking approach. Still, constant calibration with evolving EU law, particularly regarding certification, Guarantees of Origin, and cross-border infrastructure, will be essential. If implemented effectively, hydrogen could soon become a cornerstone of Europe’s sustainable energy future.

As an active participant in the renewable energy market, JLSW Law Firm has been advising clients on renewable energy projects for over 15 years. Our team closely follows technological and regulatory developments, including the rapidly evolving hydrogen sector, to provide clients with forward-looking, practical, and legally sound solutions. Our experience and commitment place us at the forefront of legal advisory in the energy transition.