The European Commission has clarified that emissions from fuel combustion and electricity use in the air-separation unit producing oxygen are excluded from the CBAM embedded-emissions calculation for hydrogen manufactured through partial oxidation or autothermal reforming.
The exclusion follows the legal methodology rather than the technical configuration of the production process. Although oxygen is used as an input, it is not classified as a CBAM precursor. As a result, emissions associated with the energy required to produce oxygen are not included in the hydrogen’s reported CBAM value.
Accounting rules affect hydrogen pathway comparisons
The clarification has implications for comparing different hydrogen production routes. Autothermal reforming (ATR) is being developed as a low-carbon hydrogen pathway, particularly when combined with high rates of carbon capture and storage (CCS).
Excluding air-separation energy from the CBAM calculation can improve ATR hydrogen’s reported embedded-emissions position compared with accounting approaches that cover a broader share of the production life cycle.
The distinction is commercially relevant as Europe continues to support large-scale hydrogen projects. In the Netherlands, the H2M Eemshaven project was designed around a 1,000 MW low-carbon hydrogen plant, with planned production of approximately 210,000 tonnes annually. The project was associated with around EUR 162.15 million in European Innovation Fund support before its status subsequently changed in the Commission’s programme records.
That change highlights the distinction between emissions accounting and project viability. Even where the applicable methodology produces a more favourable carbon figure, project economics remain dependent on gas and electricity prices, CO₂ transport and storage, infrastructure availability and long-term offtake arrangements.
Three carbon metrics serve different purposes
For hydrogen importers and financiers, the Commission’s clarification identifies which energy inputs contribute to the statutory CBAM value. A project’s full life-cycle emissions may be higher than its CBAM embedded-emissions figure when upstream or ancillary emissions fall outside the legal accounting boundary.
This makes it important to distinguish among three measures: physical life-cycle carbon emissions, EU Taxonomy or financing metrics, and CBAM embedded emissions. These measures overlap, but they are not interchangeable.
For hydrogen developers, the accounting rules make data collection and reporting design a commercial consideration. Emissions systems need to capture the information required by the specific regulatory or financing framework, rather than assuming a single carbon figure will be suitable for every purpose.
