Policy Support for Electrolytic Hydrogen: Impact of Alternative Carbon Accounting Rules

Policy Support for Electrolytic Hydrogen: Impact of Alternative Carbon Accounting Rules | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Article Policy Support for Electrolytic Hydrogen: Impact of Alternative Carbon Accounting Rules Gunther Glenk, Philip Holler, Stefan Reichelstein This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7047727/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted You are reading this latest preprint version Abstract Governments worldwide have recently launched policy support programs for hydrogen, where the level of support is to be tied to the carbon intensity of the hydrogen produced. Here we analyze the impact of alternative accounting rules for assessing the carbon intensity of electrolytic hydrogen on the financial and emission performance of Power-to-Gas (PtG) systems. We initially calibrate our model to reference plants eligible for the production tax credit specified under the Inflation Reduction Act in the United States. Contrary to common beliefs, we find that more stringent accounting rules provide investors with sufficient incentives to invest in PtG systems today. Yet, they can still lead to life-cycle average carbon intensity levels close to those for hydrogen produced from natural gas with carbon capture. Less stringent rules generally entail higher investment incentives but also significantly higher emissions. Overall, our findings reflect the incentives for investors to utilize capacity by procuring additional, carbon-intensive electricity from the general grid. JEL Codes: M41, M48, Q56, Q58 Business and commerce/Business and management Social science/Business and management Social science/Economics Earth and environmental sciences/Environmental social sciences/Environmental economics hydrogen carbon accounting climate policy life-cycle costing capacity investments Full Text Additional Declarations There is NO Competing Interest. Supplementary Files 250704H2PolicySupplementaryData.xlsx Supplementary Data Set 1 Cite Share Download PDF Status: Under Review Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7047727","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Article","associatedPublications":[],"authors":[{"id":486347532,"identity":"e6c37040-1c90-4d30-8762-513407833eeb","order_by":0,"name":"Gunther Glenk","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA6UlEQVRIiWNgGAWjYDACdgYGxoYKBgY2CPcAmCGBVwszSMsZkrU0tsG5B8AkXi3yzszHHs6cdziPj4E78XPhjjtyfGIHGG98wKPF8DBbuuHGbYeL2Rh4N0vPPPPMmE06gdlyBj4tzTxmkg+3HU5sk3+7QZq3DciQTmCT5sGrhf+b5MM5QJVAW34DtdSDtfzB5xdmHjbJjQ1gLdtAtgDVAxE+7xsws5lJzjiWDtZiDdRi2Cad2GzZg8+W9uZnkj011onzG3g33wZqkZefnXzwxg98thzAFGNswOcuBnn80qNgFIyCUTAKgAAA2vBJXZ6rgXsAAAAASUVORK5CYII=","orcid":"https://orcid.org/0000-0003-2540-838X","institution":"University of Mannheim","correspondingAuthor":true,"prefix":"","firstName":"Gunther","middleName":"","lastName":"Glenk","suffix":""},{"id":486347533,"identity":"bed55a8b-0c16-46fb-9b1c-88aa7542d37e","order_by":1,"name":"Philip Holler","email":"","orcid":"https://orcid.org/0000-0002-6702-9807","institution":"University of Mannheim","correspondingAuthor":false,"prefix":"","firstName":"Philip","middleName":"","lastName":"Holler","suffix":""},{"id":486347534,"identity":"2d31f0e3-e5d1-40fb-b67b-87c9bb9999c8","order_by":2,"name":"Stefan Reichelstein","email":"","orcid":"https://orcid.org/0000-0003-0989-6715","institution":"University of Mannheim","correspondingAuthor":false,"prefix":"","firstName":"Stefan","middleName":"","lastName":"Reichelstein","suffix":""}],"badges":[],"createdAt":"2025-07-04 14:35:52","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-7047727/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7047727/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":88322996,"identity":"8eba4943-3b1b-4d55-9826-1675a6bdf410","added_by":"auto","created_at":"2025-08-05 09:15:44","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":695438,"visible":true,"origin":"","legend":"Article File","description":"","filename":"250704H2PolicyManuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7047727/v1_covered_70e3b4f5-c3b3-4d35-bcb0-ecb061a6920c.pdf"},{"id":88321773,"identity":"a48daa52-6b4f-401c-9fe2-d1aae13e2156","added_by":"auto","created_at":"2025-08-05 09:07:42","extension":"xlsx","order_by":1,"title":"","display":"","copyAsset":false,"role":"supplement","size":2876444,"visible":true,"origin":"","legend":"Supplementary Data Set 1","description":"","filename":"250704H2PolicySupplementaryData.xlsx","url":"https://assets-eu.researchsquare.com/files/rs-7047727/v1/90509e94ad3e4b95b97f7a1d.xlsx"}],"financialInterests":"There is \u003cb\u003eNO\u003c/b\u003e Competing Interest.","formattedTitle":"Policy Support for Electrolytic Hydrogen: Impact of Alternative Carbon Accounting Rules","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"nature-portfolio","isNatureJournal":true,"hasQc":false,"allowDirectSubmit":false,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"","title":"Nature Portfolio","twitterHandle":"","acdcEnabled":false,"dfaEnabled":false,"editorialSystem":"ejp","reportingPortfolio":"","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"hydrogen, carbon accounting, climate policy, life-cycle costing, capacity investments","lastPublishedDoi":"10.21203/rs.3.rs-7047727/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7047727/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eGovernments worldwide have recently launched policy support programs for hydrogen, where the level of support is to be tied to the carbon intensity of the hydrogen produced. Here we analyze the impact of alternative accounting rules for assessing the carbon intensity of electrolytic hydrogen on the financial and emission performance of Power-to-Gas (PtG) systems. We initially calibrate our model to reference plants eligible for the production tax credit specified under the Inflation Reduction Act in the United States. Contrary to common beliefs, we find that more stringent accounting rules provide investors with sufficient incentives to invest in PtG systems today. Yet, they can still lead to life-cycle average carbon intensity levels close to those for hydrogen produced from natural gas with carbon capture. Less stringent rules generally entail higher investment incentives but also significantly higher emissions. 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