EC backs LOTOS Green H2 in hydrogen production, approves Polish measure

The European Commission (EC) has approved, under EU State aid rules, a €158 million Polish measure to support LOTOS Green H2, a special purpose vehicle ultimately owned by PKN Orlen SA, in the production of renewable hydrogen to be used in the refinery production processes.

The LOTOS’s Green H2 project is to produce renewable hydrogen through water electrolysis instead of through steam methane reforming using natural gas, and this renewable hydrogen is expected to be used in the fuel production processes in PKN Orlen’s refinery in Gdańsk.

According to the EC, the aid, which will take the form of a direct grant of €158 million, will support the installation of an electrolyser with a capacity of 100 MW, 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 to 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 lifetime. In addition, to maximise the reduction of greenhouse gas emissions, hydrogen will be produced solely with electricity generated from renewable sources, the EC said.

Margrethe Vestager, Executive Vice-President in charge of competition policy, EC, said: “This €158 million measure enables Poland to help LOTOS Green H2 in the deployment of renewable hydrogen production and allows for a partial decarbonisation of refinery activities. 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 a minimum.”

To note, the Polish measure is expected to contribute to the achievement of the EU Hydrogen Strategy and the European Green Deal targets while helping end dependence on Russian fossil fuels and fast forward the green transition in line with the REPowerEU Plan.

A few weeks ago, the EC also approved a €450 million Italian scheme to support the production of renewable hydrogen.