A new study from the University of Mannheim shows that strict CO2 accounting for electrolytic hydrogen doesn't scare off investors — but it also doesn't guarantee clean hydrogen. Looser rules push returns higher while allowing emissions to climb. 

Electrolyzer projects can deliver solid returns of 8 to 15 percent even under strict CO2 accounting rules, according to a study by University of Mannheim researchers Gunther Glenk, Philip Holler and Stefan Reichelstein, published in Nature Communications. The findings challenge a widespread assumption in the hydrogen industry: that requiring hourly matching between renewable power generation and electrolysis output discourages investment. 

The IRA as a test case 

The researchers built their analysis around the US Inflation Reduction Act, which grants hydrogen producers a tax credit of up to $3 per kilogram, scaled to the carbon intensity of production. Using this framework, the team modeled how different accounting rules affect both investment decisions and the resulting climate footprint — a mechanism they say translates directly to European subsidy schemes as well. 

Rising hydrogen prices push operators toward grid power 

Under hourly matching, returns land in the 8-to-15-percent range — enough to attract capital. But low emissions aren't automatic. As hydrogen prices rise, plant operators increasingly draw on power from the general grid to keep production running, pushing average carbon intensity toward the level of blue hydrogen made from natural gas with carbon capture. 

Switch to annual rather than hourly matching, and returns climb as high as 23 percent — well above typical returns for renewable energy assets. The trade-off: carbon intensity can rise all the way to the level of gray hydrogen. 

EU weighs delaying its hourly-matching deadline 

The question carries particular weight for Europe right now. Current EU rules allow monthly matching between power generation and hydrogen production until 2030, after which hourly matching is set to take effect. Regulators are currently debating whether to postpone that tightening to protect the economics of existing projects. 

"Strict rules generally don't deter investment, but they don't guarantee clean hydrogen either," says Gunther Glenk, junior professor at the Mannheim Institute for Sustainable Energy Studies. Co-author Philip Holler, a doctoral researcher at the same institute, adds that accounting rules ultimately determine whether subsidy programs actually contribute to industrial decarbonization. Stefan Reichelstein, who holds the endowed chair in General Management at the University of Mannheim, notes that the US-calibrated findings carry over to Europe: strict CO2 accounting rules already provide sufficient investment incentives today, particularly in regions with abundant renewable energy supply.  

(Source: Universität Mannheim /2026)