Grey hydrogen and the EU carbon border adjustment

Ting Zhao circulated a market report on grey hydrogen projecting growth from USD 232.8 billion in 2024 to USD 416.5 billion by 2034, around 6% a year, produced from natural gas by steam methane reforming without carbon capture, for refining, ammonia, methanol and chemicals.

One cost variable is already in force on the European side. The European Commission states that the Carbon Border Adjustment Mechanism entered its definitive regime on 1 January 2026, after the transitional phase from 2023 to 2025, and that hydrogen is among the covered goods, alongside cement, iron and steel, aluminium, fertilisers and electricity.

A ten-year projection tends to extrapolate the current input price. With hydrogen inside CBAM, part of the carbon cost of the imported product is charged at the border, and who absorbs it is the industrial buyer, the producer or the contract, depending on the pass-through clause.

For anyone exporting ammonia, fertiliser or steel to Europe, the carbon bill on the hydrogen used has moved from hypothesis to a contract item. The figure to establish is the emissions intensity declared per supplier, because that is what sets the amount due.