Herein, a novel approach for H2 production is presented by exploiting the synergistic potential of digestate derived from household waste (D) in the co-digestion process with oily sludge (OS), rich in mono-ethylene glycol (MEG). Our approach significantly mitigates the environmental impact of OS, a hazardous byproduct of petroleum industry, while addressing the challenge of MEG inhibition in H2 production, along with biochar recovery.Remarkably, anaerobic co-digestion of OS:D (60:40) yielded a remarkable 23.1-fold increase in hydrogen potential (436.3 ± 34.8 mL) compared to 18.7 ± 0.9 mL in OS:D (100:0). This enhanced hydrogen productivity was complemented by a notable MEG biodegradation efficiency of 86.2 ± 7.8%. Furthermore, the microbial community played a crucial role in metabolizing MEG into ethanol, acetaldehyde, and acetate through the enzymatic activities of aldehyde dehydrogenase and alcohol dehydrogenase. Dominant strains such as Clostridium (3.9%), Acinetobacter (12.7%), and Bacillus (2.1%) were identified for MEG degradation, contributing significantly to high H2-productivity.