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Mechanism Design over Magnitude: A Multi-Jurisdiction Evaluation of Carrot-Policy Effectiveness in Clean-Hydrogen Implementation

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  • Saakstra, Sake

Abstract

We evaluate six major clean-hydrogen policy interventions across four jurisdictions (US 45Q, US 45V three-pillars NPRM, EU Innovation Fund, EU CBAM, UK Track-1, China 14th Five-Year Plan) using a project-level panel of 1,354 announced hydrogen developments from the S&P Global Hydrogen Project Database (2010-2026). Treatment effects on cumulative cancellation probability are estimated using modern difference-in-differences estimators (Sun-Abraham IW, Borusyak-Jaravel-Spiess imputation, IPWRA matching, Synthetic DiD, Causal Forests, and Deaner-Ku hazard DiD) and accompanied by Rambachan-Roth honest-sensitivity bounds. Three substantive findings emerge. First, the magnitude ranking of policy effects (China 14th FYP > US 45Q > UK Track-1 > EU Innovation Fund) systematically follows the number of economic frictions each instrument addresses, not the per-unit monetary value of the subsidy. The China FYP estimate of -4.5 percentage points (honest-DiD breakdown M* = 1.5) exceeds the US 45Q estimate of -3.4 percentage points (M* = 0.2) despite comparable per-unit subsidy value, consistent with multi-friction mechanism dominance. Second, two informative nulls are identified: the EU Innovation Fund produces a precise null across six convergent estimators, and the EU CBAM produces a precise null across eight convergent estimators. The substantive interpretation is that the financing-constraint friction is not binding in the contemporary capital-abundant hydrogen environment, and that border-adjustment transmission to project-level investment decisions is weak in the early-implementation phase. Third, the US 45V three-pillars NPRM triple-difference estimate of +0.285 on US-Green cancellation hazard identifies friction amplification by policy design - the cleanest empirical test of perverse-direction sigma-channel effects in the sample. The methodological contribution is a pre-registered mechanism-falsifiability framework that disciplines mechanism interpretation against post-hoc rationalisation, combined with multi-method triangulation that strengthens both confirmatory and informative-null inferences. The policy implication is that reform of capex-grant instruments such as the EU Innovation Fund should incorporate offtake-commitment eligibility requirements, jointly addressing both financing and counterparty-risk frictions.

Suggested Citation

  • Saakstra, Sake, 2026. "Mechanism Design over Magnitude: A Multi-Jurisdiction Evaluation of Carrot-Policy Effectiveness in Clean-Hydrogen Implementation," MPRA Paper 129309, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:129309
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    References listed on IDEAS

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    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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