Hydrogen is often presented as a clean fuel capable of transforming heavy industry, shipping and long-distance transport. Yet whether hydrogen actually reduces emissions depends less on the word “hydrogen” than on how its production is counted. A new study by Glenk, Holler and Reichelstein argues that carbon-accounting rules can fundamentally reshape the economic incentives facing hydrogen producers—and may determine which technologies expand, which projects receive public support and whether climate benefits exist beyond the label attached to the fuel.
The central issue is that hydrogen is not an energy source found freely in nature. It must be manufactured, and the process can generate very different levels of greenhouse-gas emissions. Today, most hydrogen is produced from natural gas or coal through processes such as steam methane reforming and coal gasification. These methods release carbon dioxide directly, unless the emissions are captured and permanently stored. Electrolysis, by contrast, splits water into hydrogen and oxygen using electricity. Its climate performance depends on where that electricity comes from: renewable power can produce low-emission hydrogen, while electricity generated by fossil-fuelled power plants can make electrolysis highly carbon intensive.
The researchers examine how accounting systems translate these physical emissions into a carbon-intensity value for hydrogen. That value is not simply a measurement taken from a single production facility. It depends on decisions about which emissions are included, how electricity use is attributed, whether emissions are averaged over time, and how renewable-energy certificates or other contractual instruments are treated. Two identical hydrogen plants could therefore receive different carbon scores under different accounting rules, even if their equipment and physical operations were unchanged.
One of the most important distinctions is between average and marginal electricity emissions. Average accounting assigns a plant the typical emissions intensity of the electricity mix in a region. Marginal accounting asks a more consequential question: what power generation responds when the hydrogen producer increases its electricity consumption? If electrolysers operate during periods when renewable electricity is abundant, they may absorb power that would otherwise be curtailed. If they operate during periods of high demand, however, their electricity use could require additional fossil-fuel generation. The choice between these approaches can substantially alter the apparent climate value of electrolysis.
Time is another critical variable. Annual accounting may show that a hydrogen facility is matched with enough renewable electricity over the course of a year, while concealing the fact that the electrolyser runs mainly at night or during periods when renewable generation is unavailable. More detailed hourly accounting can reveal whether clean electricity is available when hydrogen is actually produced. The study highlights how such requirements create a trade-off: strict temporal matching may improve the credibility of emissions claims, but it can also reduce electrolyser utilisation and increase the cost of hydrogen.
The rules governing “additionality” produce a similar tension. Additionality requires hydrogen producers to demonstrate that the renewable electricity associated with their operations comes from new generating capacity rather than existing projects. Without such a condition, producers might purchase certificates from renewable facilities that would have operated anyway, while drawing ordinary electricity from the grid. In that situation, the contractual claim to renewable power may not represent a real increase in clean generation. Strong additionality rules can prevent this form of accounting leakage, but they may also make early hydrogen projects more expensive and slower to develop.
The researchers’ analysis shows that carbon accounting is therefore not a neutral administrative exercise. It changes the relative attractiveness of production technologies and operating strategies. A rule that rewards low reported emissions without considering system-wide effects may encourage producers to optimise their paperwork, contracts or production schedules rather than reduce total greenhouse-gas emissions. Conversely, a system that accounts for the timing and location of electricity demand can steer investment toward projects that support renewable deployment and avoid adding pressure to carbon-intensive grids.
These effects are particularly significant because hydrogen policies increasingly link financial support to emissions thresholds. Tax credits, contracts, guarantees of origin and procurement standards can all depend on a calculated carbon-intensity score. If the threshold is set using assumptions that do not reflect real electricity-system responses, a project may qualify as “clean” while delivering limited climate benefits. If the rules are excessively rigid, potentially valuable technologies may be excluded even when they can operate with low emissions under specific local conditions. The study suggests that policy design must balance verifiability, environmental integrity and the economic realities of building a new hydrogen industry.
The findings also challenge the idea that a single colour label—green, blue or grey—can adequately describe hydrogen’s environmental performance. A more useful system would identify the full production pathway, quantify upstream emissions such as methane leakage from natural-gas supply, account for electricity generation and recognise when and where production occurs. Such information could make hydrogen markets more transparent, allowing buyers to compare fuels on measured lifecycle emissions rather than on technology names or marketing categories.
As governments race to build hydrogen infrastructure, the study delivers a warning with broad implications: the carbon ledger can be as influential as the electrolyser, reformer or pipeline. Accounting rules determine which emissions become visible, which are assigned to producers and which disappear into averages or certificates. If those rules are aligned with real climate impacts, hydrogen could help decarbonise sectors that are difficult to electrify directly. If they are poorly designed, they could channel billions of dollars toward projects that appear clean on paper while shifting emissions elsewhere in the energy system.
Subject of Research: Carbon accounting rules and their effects on incentives for hydrogen production
Article Title: How carbon accounting rules shape incentives for hydrogen production
Article References: Glenk, G., Holler, P. & Reichelstein, S. How carbon accounting rules shape incentives for hydrogen production. Nature Communications 17, 7260 (2026). https://doi.org/10.1038/s41467-026-75473-z
Image Credits: AI Generated
DOI: https://doi.org/10.1038/s41467-026-75473-z
Keywords: Hydrogen production, carbon accounting, lifecycle emissions, electrolysis, renewable energy, carbon intensity, climate policy, additionality, electricity markets
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