The European Commission's adoption of the Hydrogen and Decarbonised Gas package signifies a pivotal moment in shaping the future of the hydrogen economy. The upcoming Delegated Act on Low-Carbon Fuels will play a fundamental role in defining hydrogen production methods as low-carbon, laying the groundwork for a certification scheme that covers various production routes. These routes include power grid-based electrolysis, fossil gas-based production with CCS, and extra-EU imports, all aimed at reducing greenhouse gas emissions. The study discussed in the article uses detailed modeling of the EU power sector and import opportunities to analyze the implications of key regulatory design aspects of the forthcoming Delegated Act on Low-Carbon Fuels. This modeling framework provides insights into how policy decisions will impact the competition between technologies, influencing the environmental integrity, economic competitiveness, and resiliency of the hydrogen industry. The focus on sustainability is paramount, with the primary objective being to ensure genuinely low-carbon hydrogen production that aligns with the EU's climate goals. The regulation sets emission thresholds that gradually decrease towards 2050, leading to significant emissions savings. Additionally, adopting a dynamic hourly-granular grid emission accounting framework offers environmental benefits while supporting system flexibility and market opportunities. The article also highlights the varying hydrogen production costs by technology and country, emphasizing the rapid growth of grid-based production driven by renewable integration. It points out the uncertainties surrounding gas-based production, particularly concerning technical challenges and volatile gas import prices. Importantly, the EU's reliance on hydrogen imports to address internal production gaps necessitates enforcing stringent environmental standards on international suppliers. The article underscores the intricate relationship between regulatory frameworks, technological advancements, economic factors, and environmental considerations in shaping the future competitiveness and sustainability of the EU's hydrogen industry.