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Can Poland and Ukraine lead Europe in green hydrogen?

In March earlier this year, the Polish and Ukrainian gas transmission system operators, GAZ-SYSTEM and the GTSOU signed a long-term agreement to establish a cooperation framework, aiming to set a “leading position” for both sides in the regional gas market amidst the energy transition. As part of this new cooperation agenda, both operators also declared interest in working closely in the development of biomethane and green hydrogen – two key pillars of Europe’s future energy landscape.

By 2030, the EU aims to produce 35 billion cubic metres (bcm) of biomethane and 10 million tonnes (Mt) of renewable hydrogen (and import an additional 10 Mt), as part of the bloc’s efforts to cut carbon emissions by at least 55 per cent within the next seven years. In this two-part series, we take a look into the green hydrogen, biomethane and biogas sectors in Poland and Ukraine, assessing both countries’ potential, competitiveness and obstacles in gaining industry leadership in Europe’s appetite for decarbonised gases.

Poland’s green ambitions may revolutionise its hydrogen production

Starting with green hydrogen, Poland does not look to be shy from ambition. According to its National Hydrogen Strategy, published a little over three years ago, the country aims for an electrolyser capacity of two gigawatts (GW) by 2030 and six GW by 2040. Following the Russian invasion of Ukraine, this ambition looks to have gained further momentum. The country’s biggest energy company, the ORLEN Group, aims for a total equivalent of installed electrolysis capacity, which will amount to approximately 1 gigawatt (GW) (including waste-to-hydrogen projects). In other words, it will enable the production of over 130 kilotons (kt) of renewable hydrogen by the end of this decade.

In 2022, a positive notification decision of the European Commission under the IPCEI (Important Project of Common European Interest) program Hy2Use was granted to the “Hydrogen Eagle” project, prepared by PKN ORLEN. As the only Polish project, it was included in the elite group of 35 projects from 13 European countries. This project will enable the construction of comprehensive infrastructure for the production and distribution of low- and zero-emission hydrogen in Poland. The ORLEN Group will launch a network of hydrogen hubs powered by renewable energy sources and installations processing municipal waste into zero- and low-emission hydrogen. Also under this program, a network of 54 hydrogen refuelling stations will be built in Poland for individual, public and cargo, road and rail transport.

Looking at the whole colour spectrum of hydrogen, Poland is the third biggest hydrogen producer in Europe – and the fifth in the world, with an annual production volume of around 1.3 Mt. Whilst this figure is made up of mostly grey and blue hydrogen, the country’s green ambitions may soon revolutionise its hydrogen production landscape.

The implementation of PKN ORLEN’s hydrogen strategy is gaining momentum, says Iwona Waksmundzka-Olejniczak, a Member of the Management Board at PKN ORLEN. “We want to be a transformation leader on the Central European market, producing and supplying zero and low-emission hydrogen, e.g. as an alternative fuel for the transport sector. Our ambition is to implement solutions based on advanced and environmentally friendly technologies. This is one of the areas for diversifying the revenues of the multi-energy company we are building. The decisive entry into the hydrogen market and the strengthening of PKN ORLEN’s leading position is the result of our vision of energy transformation, which we have been consistently implementing for several years,” Ms Waksmundzka-Olejniczak tells CEENERGYNEWS.

Considering potential obstacles, it is key to note that Poland does not have a regulatory framework for green hydrogen. In October 2022, the Polish government announced a draft hydrogen legislation (amending the current Energy Act) which would, among other things, recognise hydrogen as a fuel, provide for a hydrogen grid and transmission, and establish rules for creating a hydrogen system operator. The draft amendment is expected to be adopted by the Council of Ministers in the second quarter of this year, according to the Polish Ministry of Climate and the Environment.

“[Hydrogen] is still an underdeveloped market. Of course, we have a hydrogen strategy that shows the directions of development, but it will certainly be a long-term process, and it will also have to be supported by appropriate regulations” Ms Waksmundzka-Olejniczak says. “It is also not clear which hydrogen technologies and applications will in the end reach the necessary maturity and scale to take a stable place in the energy market” she adds.

Ukraine: resilient competitiveness despite 18 months of war

In a report published by Hydrogen Europe before the full-scale Russian invasion, Ukraine’s renewable hydrogen electrolysis capacity was estimated at eight GW by 2030. This comes as no surprise, considering the country’s competitive potential in renewable energy generation, as well as being home to the most extensive gas transmission system in Europe. Ukraine’s geographic location also has the potential to position the country as an attractive green hydrogen exporter, particularly if it can establish a cost-competitive supply chain, Iaroslav Kryl, CEO of Hydrogen Ukraine tells CEENERGYNEWS.

Perhaps most importantly, despite nearly 18 months of the war, the country’s competitiveness in this area remains resilient. 

Nonetheless, aside from the security challenges arising from the war, Ukraine faces several key obstacles in seizing its potential in joint green hydrogen leadership on the continent. Despite a strong political will, Ukraine’s Ministry of Energy has yet to publish a national hydrogen strategy which is hampering the sector’s development, Iaroslav Kryl says. Despite seeing key progress in recent months, Ukraine today awaits a clear regulatory framework for hydrogen projects, Mr Kryl adds.

In contrast to Poland, which has one of the biggest hydrogen markets in the region, Ukraine’s market for hydrogen is relatively small which can make it more difficult to attract investments, Mr Kryl notes.

“Developing a hydrogen industry requires a significant amount of infrastructure,” the CEO of Hydrogen Ukraine concludes, “such as production facilities, pipelines, storage facilities and refuelling stations. Currently, Ukraine has limited hydrogen infrastructure, which makes it more challenging to produce and distribute hydrogen on a large scale.”

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