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How carbon accounting rules shape incentives for hydrogen production

Year: 2026
Type: Journal Publication
Journal: Nature Communications

Abstract

Governments around the world have recently adopted policy support programs for hydrogen, tying the level of support to the assessed carbon intensity of the hydrogen produced. Here we compare alternative carbon accounting rules for determining the policy support available for hydrogen in terms of the resulting financial and carbon emissions performance of Power-to-Gas systems. We calibrate our model to reference plants eligible for the production tax credit available under the Inflation Reduction Act in the United States. Contrary to frequently articulated views, more stringent accounting rules generally provide investors with sufficient incentives to invest in Power-to-Gas systems. Nonetheless, even more stringent rules can lead to carbon intensity levels close to those for hydrogen produced from natural gas with carbon capture. Less stringent rules generally entail stronger investment incentives due to higher profitability, but also significantly higher emissions as investors procure more carbon-intensive electricity from the general grid.

Publication Information

TRR 266 researchers

Gunther Glenk University of Mannheim

Philip Holler University of Mannheim

Stefan Reichelstein, University of Mannheim

Stefan Reichelstein is the chairholder of the endowed chair in business administration at University of Mannheim. He is also Professor Emeritus in Accounting and faculty research director at Steyer-Taylor Center for Energy Policy and Finance at Stanford University. His research focuses on cost-analysis, decentralization, internal pricing and success management. He is Research Associate of the Leibniz – Zentrum für Europäische Wirtschaftsforschung (ZEW) and Research Fellow at CESifo Institute in Munich. In addition, he is managing editor of Foundations and Trends in Accounting as well as editor for the Review of Accounting Studies and department editor of the Management and Business Review. He is also member of several editorial boards like the German Economic Review, Journal für Betriebswirtschaft and Review of Managerial Science. He is member of the Academic Advisory Board at the University of Cologne and founded the newly-endowed research institute, The Mannheim Institute for Sustainable Energy Studies (MISES) at Mannheim University.


Volume Number

17

DOI

DOI Link

Cite this article as

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Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, Goethe University Frankfurt, University of Cologne, Leibniz University Hannover and TU Darmstadt who share the same research agenda.

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Funded by the Deutsche Forschungsgemeinschaft (DFG, German Research Foundation) – Collaborative Research Center (SFB/TRR) Project-ID 403041268 – TRR 266 Accounting for Transparency

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