Hydrogen is CBAM’s simplest sector on paper and its most counterintuitive one in practice, because the rule that makes the math easy is the same rule that decouples the CBAM number from what “green hydrogen” actually means.

In this article:

• The single CN code and “simple good” status that make hydrogen’s CBAM scope narrow
• The six production routes — and why “grey,” “blue,” and “green” don’t map cleanly onto the CBAM figure
• Why only direct emissions count for hydrogen in the definitive period, and what that leaves out
• The uniform free-allocation benchmark and a full worked example
• The ammonia/fertiliser cross-link, and practical guidance for exporters building green or blue hydrogen capacity

Quick refresher for anyone new to this series: CBAM is the EU’s mechanism for making imported goods pay a carbon cost comparable to what EU factories already pay under the EU Emissions Trading System. Importers of covered goods buy CBAM certificates tied to the emissions embedded in what they bring in, with the definitive period — real financial obligations, not just reporting — underway from 2026. Full mechanics are in the first post in this series.

Hydrogen is one of the six original CBAM sectors, and it’s the one I get the most surprised reactions about once people understand how it actually works. The scope is narrow, the goods classification is about as simple as CBAM gets, and yet there’s a single rule buried in the definitive-period guidance that changes how you should think about “green hydrogen” as a CBAM concept entirely. Let’s get into it.

A Narrow Scope: One CN Code, No Precursors

Unlike cement, steel, or fertilisers — sectors with multiple aggregated goods categories and layers of precursor tracking — hydrogen under CBAM is covered by exactly one CN code: 2804 10 00, “Hydrogen.” There’s no separate tracking for different purities or blends beyond one carve-out: only pure hydrogen, or mixtures of hydrogen with nitrogen usable in ammonia production, count as the CBAM good. Quantities are declared in metric tonnes of pure hydrogen.

Two categories are explicitly excluded from scope:

• Synthesis gas production is not covered at all.
• Hydrogen produced and consumed captively inside refineries or organic chemical installations — where it never leaves the plant to produce a good that CBAM tracks — falls outside the hydrogen CBAM good entirely.

Hydrogen is also classified as a “simple good” under the EU’s Methodology Act, meaning it has no CBAM precursors of its own. Its embedded emissions come solely from its own production process — there’s no upstream chain of precursor goods to trace, no stacking of embedded emissions from inputs that are themselves CBAM goods. That’s genuinely good news for anyone doing the calculation: hydrogen’s CBAM math is structurally simpler than almost any other sector in this series. What varies enormously, though, is which production route made it.

Six Routes to Hydrogen — and Very Different Emissions Profiles

The EU guidance sets out six production routes, and if you’ve spent any time around hydrogen markets, the informal color labels will be familiar:

1. Steam (methane) reforming (“grey”) — natural gas is reformed with steam into hydrogen plus CO2. This is the classic, most widely used route.
2. Partial oxidation — heavier feedstocks like residual fuel oil or petcoke are gasified into hydrogen, with a system boundary similar to steam reforming.
3. Chlor-alkali electrolysis — brine and electricity produce chlorine and sodium hydroxide, with hydrogen as a co-product.
4. Water electrolysis (possibly “green”) — electricity splits water into hydrogen and oxygen. Direct process emissions are minimal regardless of where the electricity comes from.
5. Steam reforming with carbon capture and storage (“blue”) — the same process as route 1, with an optional CCS step that captures and permanently stores the CO2, reducing the emissions figure that counts.
6. Steam cracking — hydrocarbons like naphtha or ethane are cracked, producing hydrogen as a co-product alongside olefins such as ethylene and propylene.

Worldwide, the dominant production route remains steam reforming and coal gasification, where hydrogen is the main product rather than a co-product. That matters because it’s also the route with the largest direct emissions footprint under CBAM’s accounting.

The six CBAM hydrogen production routes, grouped by typical direct-emissions intensity — the figure that actually drives the CBAM number.

The Single Biggest Storyline: Only Direct Emissions Count

Here’s the fact that matters most in this entire post, and it’s genuinely worth slowing down for.

In the definitive period, hydrogen is listed in Annex II of the CBAM Regulation — the short list of goods for which only direct emissions are taken into account. Indirect emissions, meaning the emissions tied to the electricity consumed in making the hydrogen, are excluded from the CBAM calculation entirely. They’re still monitored and reported for other regulatory purposes, but they don’t feed into the number that determines how many CBAM certificates get surrendered. That’s a change from the transitional period (2023–2025), when indirect emissions were reported for hydrogen as well.

For water electrolysis, this creates a genuinely counterintuitive outcome. Direct process emissions from splitting water are minimal no matter what powers the electrolyser. The electricity source — grid power versus renewable power — is exactly what defines “green” versus “grey” hydrogen in normal industry conversation. But under CBAM’s Annex II accounting, that electricity-source distinction simply doesn’t show up in the embedded-emissions figure. A grid-powered electrolysis plant and a renewables-powered one can, in principle, post similarly low direct CBAM emissions, even though one is what most people would call “green” and the other isn’t.

Steam reforming and partial oxidation sit at the opposite end. Their emissions come from combusting and reforming fossil feedstock — a direct process emission by definition — so they’re fully counted, with nothing excluded.

The plain-English version: CBAM’s hydrogen accounting is driven by where the emission boundary sits — direct process versus indirect electricity — not by the marketing label the industry uses. It’s an important distinction for anyone using CBAM numbers as a proxy for genuine climate performance. A low CBAM figure for electrolysis hydrogen tells you the direct process is clean; it does not, by itself, tell you the electricity was renewable.

What CBAM actually counts for hydrogen: direct process emissions flow into the certificate math; the electricity source that makes hydrogen genuinely “green” or “grey” in ordinary usage is excluded under Annex II direct-only accounting.

A few technical notes worth knowing: chlor-alkali and plain water electrolysis aren’t given separately detailed rules in the Methodology Act, since both “include minimal direct emissions,” and instead fall under the general system-boundary rule. Where electrolysis vents its oxygen by-product, all process emissions attach to the hydrogen; where oxygen is collected and sold, emissions split between the two by a molar-ratio formula — the same logic used to apportion emissions across co-products at chlor-alkali and steam-cracking plants. Where CCS captures and permanently stores the CO2 from steam reforming, that captured amount is deducted from direct emissions — the mechanism behind “blue” hydrogen’s improved position relative to unabated grey. And where a process exports usable heat, the equivalent emissions get subtracted too, using a default heat factor of 62.3 t CO2/TJ when the heat’s origin is unknown.

One Benchmark for All Routes

Here’s the second notable simplification. The free-allocation benchmark used to offset a hydrogen importer’s CBAM bill — the figure that stands in for what an EU producer would still receive for free under the EU ETS during the phase-in period — is 5,089 tonnes of CO2 per tonne of hydrogen, and it applies uniformly, regardless of which of the six production routes actually made the hydrogen.

That’s worth sitting with for a second, because it cuts against intuition. The emissions calculation is highly route-sensitive — grey hydrogen and electrolysis hydrogen can post very different direct-emissions figures. But the free-allocation offset used to reduce the final certificate count is exactly the same number no matter the route. Hydrogen has no differentiated benchmark by production process the way some other sectors do.

There’s also no extra sector-specific reporting burden layered on top. The official reporting-requirements table for hydrogen in the annual CBAM declaration lists additional chemical-sector fields as simply “None” — unlike some sectors, hydrogen importers don’t face extra disclosure fields beyond the standard declaration.

A Worked Example: 100 Tonnes of Steam-Reforming Hydrogen

The official guidance walks through a natural-gas steam-reforming installation to show how the numbers actually flow. Here’s the shipment-level version, scaled to a 100-tonne import in 2028:

A 100-tonne steam-reforming hydrogen import, worked through to a net certificate obligation, per the official guidance’s own example.

That installation-level SEE of 8,396 t CO2/t H2 comes from natural gas input (190,000 tonnes, roughly 9,120 TJ) at a 56.1 t CO2/TJ emission factor, generating about 511,632 t CO2, minus roughly 49,867 t CO2 credited back for exported heat — netting to about 461,765 t CO2 across 55,000 tonnes of hydrogen output. Even in hydrogen’s “simple” sector, heat export credits, feedstock emission factors, and CCS deductions all shift the final number before it reaches the free-allocation step.

The Fertiliser Cross-Link: A Real Simplification for Ammonia

Hydrogen has no precursors of its own, but it’s frequently a precursor for other CBAM goods — most importantly ammonia, and also pig iron or direct reduced iron in the steel sector.

For ammonia and fertiliser producers, there’s a genuinely useful simplification worth flagging here. Where hydrogen is used as a precursor in ammonia production and the conditions for disregarding a precursor’s indirect emissions are met — which they generally are, since hydrogen is an Annex II, direct-emissions-only good — the indirect (electricity) emissions of that hydrogen precursor can be disregarded when calculating the ammonia’s own embedded emissions. Only hydrogen’s direct emissions flow through into the ammonia figure.

In plain terms: an ammonia producer buying in electrolysis-based hydrogen doesn’t have to layer the electricity footprint behind that hydrogen into its own CBAM math. That’s a meaningful simplification for green-ammonia supply chains specifically, and it’s the same Annex II logic driving everything else in this post, just showing up one step downstream. If ammonia and fertiliser CBAM exposure is relevant to your business, our fertilisers deep-dive covers the rest of that chain.

One related detail for anyone verifying a hydrogen precursor: where the hydrogen is certified as an RFNBO (Renewable Fuel of Non-Biological Origin) under the EU’s renewable energy framework — required anyway for marketing hydrogen as “green” in the EU — that certification lets verifiers use a simplified, risk-based approach rather than a full independent verification. RFNBO certification, in other words, effectively doubles as a CBAM verification shortcut.

Practical Guidance for Hydrogen Exporters

If you’re producing or planning to export hydrogen to the EU, a few things follow directly from everything above:

• Know your route, and document your system boundary. Because the CBAM number depends on direct emissions specifically, your feedstock, whether CCS is applied, and whether heat is exported matter more to your CBAM figure than the color label you’d use in a sales pitch.
• A structurally light CBAM footprint isn’t the same as being verifiably green. An electrolysis producer’s direct-emissions figure may look favorable regardless of power source, but buyers increasingly care about the underlying story — climate commitments, renewable procurement, RFNBO status — for reasons that go beyond the certificate count.
• Get RFNBO certification if you’re targeting the EU green hydrogen market. It simplifies CBAM verification and is likely required for market access regardless.
• Track captured CO2 volumes carefully if you run CCS, since only permanently stored or chemically bound CO2 earns the deduction from direct emissions.
• Watch the broader market context. Global investment in green and blue hydrogen export capacity is growing, including from regions positioning themselves as future export hubs — the Middle East among them. For hydrogen producers weighing EU-bound export strategy, our Middle East regional post covers the broader CBAM landscape for that region.

How Sprih Helps

Hydrogen’s CBAM rules are simple on paper — one CN code, no precursors, a single uniform benchmark. But the nuance in this post is exactly the kind of thing that’s easy to get backwards if you’re relying on a spreadsheet built around industry color labels instead of the actual Annex II accounting rule. Getting the number right means tracking the right emissions boundary, knowing when CCS deductions and heat export credits apply, and — if you’re buying hydrogen as an ammonia precursor — understanding which of a supplier’s emissions actually flow through to your own declaration.

That’s the layer we built Sprih for. Our SustainSense platform indexes sustainability and emissions data across more than 120,000 companies and 400,000 reports, giving importers, ammonia producers, and hydrogen exporters a faster way to find, verify, and organize the supplier-level data CBAM calculations depend on. We’re also building CBAM-specific tooling to help importers and their upstream suppliers calculate and manage embedded-emissions data directly, rather than falling back on conservative default values.

Our view is simple: CBAM compliance is a supply-chain data problem before it’s a compliance problem, and companies that treat it that way turn it into an advantage rather than a cost center. Sprih is an AI-native sustainability intelligence company helping enterprises turn climate and compliance data into competitive advantage.