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European Commission approves LOTOS Green H2 renewable hydrogen production

The European Commission has approved, under EU State aid rules, a 158-million-euro Polish measure to support the Orlen Group’s LOTOS Green H2 in the production of renewable hydrogen for the refinery production processes, the EU’s executive body announced on Tuesday (12 April).

The measure will aid the efforts towards achieving the EU Hydrogen Strategy and the European Green Deal targets, the Commission said in its press release.

Poland notified the Commission of its plan to support LOTOS’s Green H2 project to produce green hydrogen through water electrolysis instead of through steam methane reforming using natural gas. The green hydrogen would then be used in the fuel production processes in PKN Orlen’s refinery in Gdańsk.

The aid, which will take the form of a direct grant of 158 million euros, will support the installation of an electrolyser with a capacity of 100 MW (megawatts), as well as the construction of a 50 MW photovoltaic power plant and 20 MWh battery storage. The electrolyser is expected to start operating as of 2027 and gradually increase its production up to 13,600 tonnes of renewable hydrogen per year.

Once completed, the project is expected to avoid the release of a total of 2.5 million tonnes of carbon dioxide over the project’s lifetime, the Commission said.

“This 158 million-euro measure enables Poland to help LOTOS Green H2 in the deployment of renewable hydrogen production and allows for a partial decarbonisation of refinery activities,” said Margrethe Vestager, Executive Vice-President in charge of the EU’s competition policy. “This will contribute to the greening of a very energy-intensive sector, in line with our commitment to transition to a net zero economy. At the same time, it ensures that any potential competition distortions are kept to the minimum.”

The Commission assessed the measure under Article 107(3)(c) of the Treaty on the Functioning of the EU (TFEU) and the Guidelines on State aid for climate, environmental protection and energy 2022 (CEEAG). It found that, among others, this measure has a “limited impact on competition and trade” within the bloc. In particular, it is “necessary and appropriate” to promote the production of renewable hydrogen. In addition, it is “proportionate,” as the level of the aid corresponds to the effective financing needs.

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