My first thought was, it would be even crazier if they use the same fuel as in Protons. How it's called in English, dimethylhydrazine?
I *think* the Russians use unsymmetrical dimethyl hydrazine (UDMH) but it's all basically the same stuff. The orange clouds are nitrogen tetroxide (NTO), which is the oxidizer for these hypergolic fuel combinations. UDMH, MMH and Hydrazine are all formulations of the same fuel and they are either burned with NTO or nitric acid blends. Proton (and a few of the lesser-used Russian launch vehicles) and basically all of the Chinese rockets use these fuels currently. The US unofficially phased them out with the retirement of the Titan vehicles. I say unofficially because there was no directive to any companies in the US to stop using those fuels - the industry just moved away from them.
Satellites and space vehicles like the Dragon still use these fuels though and it will be a long time before they are phased out for those applications. These fuels store very well (they stay liquid without refrigeration or heating) and because they don't need ignition systems, they make the overall system much simpler.
The EU has a directive to phase out hydrazine and there are better-performing alternatives out there. Unfortunately, those alternatives are not perfect and require a lot of energy to get them to burn. This has the side effect of making them less useful for attitude control as it makes it harder to rapidly pulse the thrusters without dumping a huge amount of electrical power to keep the system on stand-by. The new fuels are also more expensive and have almost no supply chain to speak of.
But the EU, being the EU, doesn't really care about what's reasonable and are fine with imposing high costs on businesses for marginal (or even non-existent) environmental gains and worker safety. Pollution caused by the manufacture of these fuels and the operations of space vehicles that use them is negligible*. In fact, while the new fuels are less toxic to people to handle, I doubt that their production processes will be any less dirty than most other chemical production processes or the production processes for hydrazine/NTO specifically.
And on worker safety - the new fuels aren't even non-toxic, they are just less toxic than the old stuff. And because there is decades of experience with the old fuels, the protocols for handling it while fueling spacecraft are well understood and generally pretty good. It looks bad that workers have to wear full chem-suits but they don't get poisoned. At least in the US and EU and I assume in Russia this is true. I can't say anything about how often Chinese technicians get poisoned by fuels but I wouldn't be surprised if it was a high number.
*This does not apply to launch vehicles (i.e. rockets) because they use huge amounts of these fuels, burn them in atmosphere and then the stages get dumped in the ocean or on the land. None of that applies to satellites and other non-launch space vehicles.
Also note that I acknowledge fully that manufacturing of space vehicles and satellites is a pollution-intensive process - it's just that the world doesn't build high volumes of these vehicles so the overall pollution footprint is small even if dis-proportionally large relative to the number of vehicles built. Since only a fraction of these space vehicles/satellites use these fuels at all then an even smaller portion of the overall pollution footprint is caused directly by fuel production and handling.
In other words the EU is misguided in this specific approach to dealing with industrial pollution. They are hurting an entire industry within their borders for almost non-existent environmental gains. This will cause them to lose market shares to industry from countries that don't have these anti-hydrazine initiatives. If this effort would have a measurable impact on pollution I'd be all for it but it just won't help anything.