Kamil Zawicki, co-managing partner, leader of Energy & Natural Resources Practice, Kubas Kos Gałkowski, Poland
Aneta Pawłowska, senior associate, Energy & Natural Resources Practice, Kubas Kos Gałkowski, Poland
The ever-increasing interest in hydrogen is definitely not accompanied by legislative changes serving the implementation of the 6th objective of the Polish Hydrogen Strategy until 2030 with an outlook until 2040, i.e. "Creating a stable regulatory environment", or rather the pace at which these changes are being proceeded. Despite the existence of several fragmentary regulations contained in some Acts of Parliament and subordinate acts, the Polish legal order still lacks an act that would comprehensively regulate the widely understood hydrogen law. Admittedly, during the previous term of the Polish national Parliament, an attempt was made to draft such an act, resulting in the preparation of a fairly comprehensive (just over 30 pages long) draft Act amending the Energy Law and certain other acts (RCL list no. UD382). Despite, or perhaps because of, the introduction of an overly broad scope of regulations relating to the hydrogen market, introducing - in the opinion of the President of the Energy Regulatory Office - at times "a wider range of restrictions and obligations than in the case of such developed markets as the natural gas or electricity markets", the aforementioned draft was not ultimately adopted by the Standing Committee of the Council of Ministers, ending its existence at the opinion stage.
However, after a relatively long period of legislative silence on the subject, it was not until 27 May 2024 that a new draft Act amending the Energy Law and certain other acts was published on the RCL website (list no. in RCL UD36), the main aim of which, as the authors of the draft themselves indicate, is to "create a regulatory framework for the operation of the hydrogen market in Poland".
However, the question arises - what specific solutions are behind this, and are they better than those included in the previous draft UD382?
The starting point is the introduction of an exceptionally extensive conceptual grid, including, among other things, legal definitions of low-emission hydrogen, renewable hydrogen and renewable hydrogen of non-biological origin, with the right assumption of simultaneous abandonment of the system of cascading references to successive legislative acts, making - as in the case of the previous draft of UD382 - the reading of even the basic concepts extremely illegible and therefore burdensome.
Further, the authors of the new project propose that the functioning of the hydrogen market in Poland should be based on a system of contracts already well known to the energy law, updated with, respectively, a hydrogen sales contract, a contract for the provision of hydrogen transmission or distribution services and a contract for the provision of hydrogen storage services, which is also consistent with, among other things, the newly introduced concepts of the hydrogen transmission grid, hydrogen distribution grid and the definition of hydrogen storage. Furthermore, the draft assumes that the supply of hydrogen is also to take place on the basis of a hydrogen complex agreement containing the provisions of the hydrogen sales contract and the hydrogen transmission or distribution service contract or the provisions of the hydrogen storage service contract, which, as a more accessible solution for market participants, should also be assessed as beneficial in principle.
In addition, the intention of the authors of the draft is for the Polish hydrogen economy to be based on the activity of as many as five new operators, i.e., a combined gas-hydrogen system operator, combined hydrogen system operator, hydrogen transmission system operator, hydrogen distribution system operator and hydrogen storage system operator, respectively, which may come as no surprise given that the previous draft of UD382 provided for the introduction of only three new types of operators. Yet, this solution was widely criticised as excessive, given the early stage of development of the hydrogen market in Poland. It seems, however, that the authors of the new project drew some conclusions from the comments made on the previous draft, which may result at least in partial changes to the issue of obtaining a licence, which was previously reserved also for the possibility of transporting hydrogen through hydrogen grids (with certain exceptions), and which is currently only provided for activities involving hydrogen storage (with the exception of local storage in small hydrogen storage facilities) and trading in hydrogen, but only where the annual turnover exceeds the equivalent of EUR 1,000,000. In addition, an attempt to combine the concession and designation procedure in the case of a hydrogen transmission system operator and a hydrogen distribution system operator should be assessed as positive, which may - as the authors themselves rightly point out - contribute to speeding up the establishment of these operators, reducing operating costs and facilitating current activities.
In view of the current lack of hydrogen infrastructure, in the case of both the UD382 and UD36 projects, it is also pertinent to try to make use of the existing potential and experience of operators in the gas market, which, in the case of the latter project, is reflected above all in the introduction of the institution of a combined gas-hydrogen system operator. It is also a significant merit that the authors of the new project have ensured that, despite the introduced facilitations in the use of fixed assets from the gas sector, there is no cross-subsidisation through the financing of gas activities with funds earmarked for hydrogen.
In conclusion, it seems that the authors of the new draft UD36 took into account at least some of the comments submitted to the previous draft UD382 during the legislative work. However, this does not mean that the amendments proposed remain without flaws.
Currently, the draft UD36 is at the consultation stage. It remains to be seen what the outcome of the consultation will be and to what extent it will affect the future of the draft.
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For further information on this topic please contact Kamil Zawicki or Aneta Pawłowska at Kubas Kos Gałkowski by telephone (+48 12 619 40 40) or email ([email protected] or [email protected]). The Kubas Kos Gałkowski website can be accessed at www.kkg.pl.