Environmental assessment of hydrogen: does hydrogen matter for environmental efficiency improvement?

ABSTRACT This paper first measures the level of environmental efficiency (EE) in 72 countries between 2001 and 2019 by adopting the Global Malmquist-Luenberger productivity index in the framework of the super slack-based-measure model. Then, by using the instrument variable-generalized method of moments (IV-GMM) approach, we examine the role of hydrogen development in increasing EE. We also pay attention to the asymmetric effect, the moderating effect, and the mediating effect in the hydrogen development-EE nexus. Several findings are highlighted as follows: (1) Hydrogen development can significantly increase EE. (2) The marginal impact of hydrogen development on EE is significantly positive in countries with a high level of EE, while it is insignificant in countries with a low level of EE, which shows the asymmetric EE enhancement effect of hydrogen development. (3) Foreign direct investment is a key moderating variable in the nexus between hydrogen development and EE, which can strengthen this positive nexus. And (4) mediating effect analysis documents that technological progress is an effective mediating variable through which hydrogen development affects EE. According to these results, we propose several policy implications for the acceleration of hydrogen development and EE.