Q&A session: BIOGAS, HYDROGEN and BIOMETHANE under the microscope of the law.

Post-production waste from furniture factories can be used to produce biogas.

Biogas is defined as a gas obtained from biomass, in particular from animal or plant waste processing facilities, sewage treatment plants and landfills in accordance with Article 2(1) of the Renewable Energy Sources Act of 20 February 2015 (i.e. Journal of Laws 2023, item 1436, as amended; hereinafter: ‘RES Act’).

Post-production waste from a furniture factory, as waste of plant origin from industrial activities, is considered biomass within the meaning of the RES Act.

It is worth bearing in mind that only production waste and residues, including those from the broadly defined wood industry, can be used for energy purposes, hence biogas will not be the gas produced as a result of the combustion of so-called full-value wood (meeting the quality requirements set out in separate regulations).

The basic legal act that contains assumptions related to the production of fuels of non-biological origin including green hydrogen is the Directive of the European Parliament and of the Council (EU) 2018/2001 of 11 December 2018 on the promotion of the use of energy from renewable sources (hereinafter: “RED II Directive”), which was transposed by the Act of 17 August 2023 amending the RES Act (inter alia, with regard to guarantees of origin).

For the production of green hydrogen, a key role is played by the Commission Delegated Regulation (EU) 2023/1184 of 10 February 2023 supplementing the RED II Directive, by establishing an EU methodology setting out detailed rules for the production of renewable liquid and gaseous transport fuels of non-biological origin.

The regulation is directly applicable in all EU countries, but also contains regulatory mandates for EU Member States.

Poland has not yet adopted comprehensive solutions for renewable hydrogen production.

The rules for the measurement of hydrogen for the issuance of certificates and guarantees of origin are contained in the Regulation of the Ministry of Climate and Environment of 26 February 2024 on requirements for the measurement, registration and calculation of renewable hydrogen transported by means of transport other than gas networks, which will enter into force on 15 March 2024 (Link:

https://isap.sejm.gov.pl/isap.nsf/download.xsp/WDU20240000286/O/D20240286.pdf)

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Such a register shall be kept by the Director General of KOWR pursuant to Article 24 of the RES Act:

1. The register of agricultural biogas producers is kept by the Director General of KOWR.
2. The Director General of KOWR shall make an entry in the register of agricultural biogas producers on the basis of an application of a producer performing economic activity in the field of agricultural biogas.
3. (repealed).
4. An application for entry into the register of agricultural biogas producers may be submitted via the teleinformatics system administered by the Director General of the NEB.

Article 7(1)(2) of the RES Act classifies as a regulated activity the production of: biogas, biomethane, biogas used for the production of biomethane, biomethane from biogas.

The activity of producing only biogas that is not used for the production of biomethane should also be considered as a regulated activity:

1.The economic activity of:

(…)

2) biogas or biomethane, consisting in the production of biogas for the production of biomethane or the production of biomethane from biogas, hereinafter referred to as “biogas or biomethane business activity”, is a regulated activity within the meaning of the Act – Entrepreneurs’ Law and requires an entry in the register of producers performing business activity in the field of biogas or biomethane, hereinafter referred to as the “register of biogas producers”.

As understood, the question relates to the rules for the production of renewable transport fuels of non-biological origin and we assume that temporal correlation is at issue, as geographical correlation only relates to the location criteria of the generating facility (e.g. an electrolyser).

Temporal correlation, which is regulated in the second paragraph of Article 6 of Commission Delegated Regulation (EU) 2023/1184 of 10 February 2023 supplementing the RED II Directive by establishing an EU methodology setting out detailed rules for the production of renewable liquid and gaseous transport fuels of non-biological origin, does not indicate the period of storage of the renewable electricity used, for example, for the electrolysis process.

It indicates that the energy storage must be behind the same grid connection point as the electrolyser:

From 1 January 2030.

the temporal correlation condition shall be deemed to be met if renewable liquid and gaseous transport fuel of non-biological origin is produced in the same period of one hour during which renewable electricity was produced under a renewable electricity purchase contract, or from renewable electricity from a new energy storage facility located behind the same grid connection point as the electrolyser or the renewable electricity generation facility, supplied in the same period of one hour during which electricity was produced under a renewable electricity purchase contract.

Following notification to the Commission, Member States may apply the provisions set out in this paragraph from 1 July 2027 to renewable liquid and gaseous transport fuel of non-biological origin produced on their .

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New energy carriers such as biomethane or hydrogen covered by guarantees of origin will be entered in the Guarantees of Origin Register maintained by the Polish Power Exchange (POLPX). Currently, guarantees of origin have not yet been issued for biomethane and hydrogen, but the POLPX has confirmed that it is responsible for maintaining the register for these energy carriers. Once applications for guarantees of origin have been received, POLPX will prepare an amendment to the Guarantees of Origin Regulations.

Guarantees of origin and certification are two separate instruments. A guarantee of origin is an electronic document certifying to the end user that the quantity of electricity, biomethane, heat or cold, renewable hydrogen, biogas or agricultural biogas, respectively, specified in that document, has been produced from renewable energy sources (Article 120(1) of the RES Act). Guarantees of origin are issued by the President of the ERO. Guarantees of origin issued in another EU country are recognised by the President of the ERO (Article 123(1) and (2) of the RES Act):

1. The President of the ERO, upon the written request of an entity, shall recognise a guarantee of origin issued in another EU Member State, the Swiss Confederation or a Member State of the European Free Trade Agreement (EFTA) – a party to the Agreement on the European Economic Area or a Member State of the Energy Community.
2. The President of the ERO shall refuse to recognise the guarantee of origin referred to in paragraph 1 if there are reasonable doubts as to its authenticity or reliability.

Meanwhile, a certificate is a document issued by an accredited laboratory, which confirms the fulfilment of sustainability criteria indicated in the RED II Directive and voluntary certification systems. The schemes are recognised throughout the EU, and certificates issued in EU countries are recognised in other Member States.

Regarding the measurement of hydrogen, a Regulation of the Ministry of Climate and Environment of 26 February 2024 on requirements for measurement, registration and calculation of the quantity of renewable hydrogen transported by means of transport other than gas networks has been issued, which will enter into force on 15 March 2024.

Link:

https://isap.sejm.gov.pl/isap.nsf/download.xsp/WDU20240000286/O/D20240286.pdf

On the other hand, with regard to the draft regulation of the Minister of Climate and Environment on requirements for the measurement, registration and calculation of the quantity of biogas, agricultural biogas and biomethane produced in renewable energy installations from renewable energy sources and transported by means of transport other than gas networks, work is still ongoing in the Legal Affairs Committee.

Link:

https://legislacja.gov.pl/projekt/12378250/katalog/13013490#13013490

The Act of 13 July 2023 on facilitating the preparation and realisation of investments in agricultural biogas plants and their operation (Journal of Laws item 1597) introduced in Art.

2(2) of the RES Act a new definition of agricultural biogas, which excludes the use of municipal waste, including biodegradable waste contained therein, for the production of agricultural biogas:

agricultural biogas – gas obtained in the process of methane fermentation of:

1. (a) agricultural products and agricultural by-products, including animal manure,
2. (

b

3. ) products from the processing of products of agricultural origin and by-products, waste or residues from such processing, including food processing and production, from industrial plants, as well as from on-site waste water treatment plants from agri-food processing, where separation of industrial waste water from other types of sludge and waste water is carried out,

1. (c) out-of-date or unfit for consumption food products, (

d

2. ) fats and oil blends from oil/water separation containing only edible oils and fats,

(e

3. ) vegetable biomass collected from land other than that recorded as agricultural, (

f

4. ) livestock manure from non-agricultural activities

– excluding biogas from municipal waste, landfill sites and feedstock from waste water treatment plants other than those mentioned in point (

b

1. )

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b.

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As we understand it, the question refers to biomethane as a fuel of non-biological origin that has not been fed into the grid. According to the information we have obtained, such biomethane has been tested at the Laboratory of the Oil and Gas Institute.

Dla nośników energii,  które nie zostały wprowadzone do sieci, również wydawane są gwarancje pochodzenia zgodnie z art. 120 ust. 5  ustawy o OZE.

5. W celu wydania gwarancji pochodzenia za wprowadzenie w inne miejsce niż sieć uznaje się, w przypadku:

1) energii elektrycznej – dostarczenie za pomocą linii bezpośredniej w rozumieniu art. 3 pkt 11f ustawy – Prawo energetyczne albo bezpośrednio do instalacji odnawialnego źródła energii wytwarzającej wodór odnawialny lub biometan;

2) wodoru odnawialnego, biogazu albo biogazu rolniczego – miejsce wprowadzenia do środka transportu innego niż sieci gazowe;

3) biometanu – miejsce wprowadzenia do środka transportu innego niż sieci gazowe, a w przypadku braku konieczności transportowania biometanu – miejsce wprowadzenia do instalacji służącej do tankowania pojazdów silnikowych biometanem.

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The FIT scheme guarantees the sale of unused electricity generated in a renewable energy source installation with a capacity of less than 500 kW and with a capacity of not less than 500 kW and not more than 1 MW if it is fed into the grid in accordance with Article 70a(1) and (2) of the RES Act. It is not possible to sell electricity to an entity that does not have a grid.

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Article 3 of the Act of 13 July 2023 on facilitating the preparation and implementation of investments in agricultural biogas plants and their operation (Journal of Laws item 1597) indicates the entities authorised to prepare and implement investments in agricultural biogas plants. In the case of the disposal of real estate or shares referred to in Article 7 of the aforementioned Act, such an act is deemed invalid. Exceptions are provided for other acts producing legal effects to which the real property or shares may be subject: a legal act to establish security for the repayment of debts of a bank or other financial institution financing or co-financing the construction or operation of an agricultural biogas plant of an authorised entity, or the operation of a farm or a special division of agricultural production by an authorised entity, or the performance of an activity by an authorised entity. With regard to the other specific questions, it is possible to answer them after first analysing the specific case.

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The basic document is the guarantee of origin application, the elements of which are indicated in Article 121(3) of the RES Act; a certificate may also be necessary. The ERO President has not yet published the application forms for the issuance of guarantees of origin for biomethane and heat, while an application form for the issuance of guarantees of origin for electricity has been posted on the ERO website.

• If I import biomethane from another EU country with issued guarantees of origin when formally I am not a biomethane producer in Poland – can I apply for recognition of a guarantee of origin for biomethane?

Pursuant to Article 123(1) of the RES, the recognition of a guarantee of origin from another country takes place upon written request by the entity holding such a guarantee, which means that you do not have to be a producer. Guarantees of origin issued from another EU country shall be recognised by the President of the ERO:

1. The ERO President, upon a written request of an entity, shall recognise a guarantee of origin issued in another EU Member State, the Swiss Confederation or a Member State of the European Free Trade Agreement (EFTA) – a party to the Agreement on the European Economic Area or a Member State of the Energy Community.
2. The President of the ERO shall refuse to recognise the guarantee of origin referred to in paragraph 1 if there are reasonable doubts as to its authenticity or reliability.

An application for a guarantee of origin can only be made by a generator in accordance with Article 121(1) of the RES Act.

Despite your certificate, you will not be able to obtain a guarantee of origin:

Guarantees of origin shall be issued upon the written request of a generator of electricity, biomethane, heat or cold, renewable hydrogen, biogas or agricultural biogas produced from renewable energy sources in a renewable energy source installation, excluding a micro-installation, hereinafter referred to as ‘guarantee of origin application.

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The price for biogas is not regulated in a regulation, as there is no statutory authorisation to adopt a regulation on a reference price. The established prices for biomethane pursuant to Article 83o of the RES Act, given during the presentation, are regulated by the ordinance of the Minister of Climate and Environment of 13 November 2023 on the reference price for biomethane.

In light of Article 83l of the RES Act, the FIT/FIP support scheme applies to biomethane fed into the gas grid:

1.A biomethane generator in a renewable energy source installation with a total installed capacity of the renewable energy source installation for the production of biomethane, converted to installed electrical capacity of not more than 1 MW, may sell biomethane injected into the gas grid to a selected entity.

2.The generator referred to in paragraph 1 shall be entitled to cover the negative balance referred to in Article 93(2)(3)

The execution of transactions for the sale of guarantees of origin of biogas or heat will take place between the members of the Guarantees of Origin Register maintained by the POLPX pursuant to Article 124(1) of the RES Act:

The Guarantees of Origin Register shall be maintained by an entity operating:

1) a commodity exchange within the meaning of the Commodity Exchange Act or

2) on the territory of the Republic of Poland a regulated market within the meaning of the Financial Instruments Trading Act.

All details related to the sale have been regulated in the Regulations of the Guarantee of Origin Register (Section III §17) published on the POLPX website.

The Rules currently in force have not yet been adapted to biogas or heat.

The operation of the Registry will start when the first guarantees of origin are issued.

Renewable liquid and gaseous transport fuels of non-biological origin means liquid or gaseous fuels used in the transport sector other than biofuels or biogas whose energy value is derived from renewable sources other than biomass (Article 2, point 36 of the RED II Directive).