The European Commission 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 clarification applies even though oxygen is used as an input in the process. Under the legal methodology, oxygen is not classified as a CBAM precursor, so energy-related emissions linked to producing oxygen are not included in the reported CBAM value.
Legal methodology determines what counts in CBAM embedded emissions
The Commission’s approach is based on the legal accounting boundary rather than the technical configuration of hydrogen production. As a result, emissions associated with energy required to produce oxygen are excluded from the hydrogen’s CBAM embedded-emissions figure. The exclusion therefore affects how hydrogen pathways are quantified for CBAM purposes.
Implications for comparing hydrogen production routes
The clarification affects comparisons between 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 also relevant for large-scale project planning in Europe. 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 linked to around EUR 162.15 million in European Innovation Fund support before its status changed in the Commission’s programme records.
Emissions accounting versus project viability
The change in programme records highlights differences between emissions accounting outcomes and project viability. Even where the applicable methodology results in a more favourable carbon figure, project economics depend on gas and electricity prices. They also depend on CO₂ transport and storage, infrastructure availability, and long-term offtake arrangements.
Three carbon measures used by different stakeholders
For hydrogen importers and financiers, the Commission’s clarification indicates 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 requires distinguishing among physical life-cycle carbon emissions, EU Taxonomy or financing metrics, and CBAM embedded emissions.
These measures overlap but are not interchangeable. For hydrogen developers, the accounting rules influence data collection and reporting design as a commercial consideration. Emissions systems need to capture information required by the specific regulatory or financing framework rather than assuming a single carbon figure will meet every use case.