Evidence item

Here, combining an installation-level model of green hydrogen demand with an original database of >14,000 potential offtakers in Europe, we show that, conditional on diffusion patterns mirroring natural gas power generation (a historical analogue), demand-side spatial considerations are critical for closing this gap. Spatial spillovers—where local adoption increases adoption likelihood nearby—strongly shape diffusion, and their effect rises (>20-fold) when green hydrogen is not cost competitive. Spillover potential is concentrated in Central–Western Europe and hard-to-abate sectors: over half of the 10% most central installations are located in five German or Belgian industrial regions. Spatially informed policies deliver superior outcomes: targeting the most central offtakers improves policy cost-effectiveness by up to 41% (€0.96 kg−1) in a size, sector and cost-controlled setting and 15% (€0.20 kg−1) when following the European Hydrogen Bank auction format.