European policy supporting green hydrogen could achieve greater results if public resources are concentrated in regions with high consumption potential.
A study published in Nature Energy by researchers from the Vienna University of Economics and Business (WU Vienna) concludes that incorporating the geographic distribution of potential consumers can significantly improve the cost-effectiveness of policies aimed at boosting this technology.
The work, led by Christian Rumpelnik alongside Behnam Zakeri and Kavita Surana, analyzes a database of 14,108 potential hydrogen consumers in Europe.
The model identifies areas where the adoption of one facility can increase the likelihood of nearby facilities also incorporating green hydrogen, a phenomenon termed spillover or spatial contagion effect.
Demand emerges as a strategic variable
Researchers found that these effects are especially relevant when green hydrogen is not yet competitive against conventional alternatives. Under these conditions, the proximity effect can increase more than 20-fold compared to its average level.
The research places a significant portion of the spillover potential in industrial regions of Central and Western Europe, particularly in hard-to-abate sectors such as chemicals, metals, and steel.
Identified areas include the Rhine-Ruhr corridor and the North Sea coast. Industrial concentration is relevant because a consuming facility can share infrastructure, specialized suppliers, and technical knowledge with other nearby projects.
In this way, an initial adoption can lower some of the barriers faced by facilities that arrive later.
Economic effect can reach 41%
The study’s most significant result appears in the economic evaluation of policies. When consumers with the highest spatial centrality are selected, policy cost-effectiveness can improve by up to 41%, equivalent to a reduction of up to 0.96 euros per kilogram in the cost associated with generating additional demand, under a scenario controlled for size, sector, and costs.
The result also appears when modifying a mechanism similar to the European Hydrogen Bank auctions. By incorporating a centrality criterion with a 10% weighting, in addition to the cost-competitiveness criterion, the model achieves a 13% to 15% improvement in policy cost-effectiveness.
The study further estimates that this modification could raise annual demand to 0.6 million tonnes by 2100, although results depend on the assumptions used to model hydrogen diffusion.
Europe faces an implementation gap
The research stems from a discrepancy between European ambitions and actual market development. The EU maintains a target to produce 10 million tonnes of green hydrogen per year within the bloc and import another 10 million tonnes by 2030, while aiming for hydrogen to reach 10% of final energy demand by 2050.
However, the model used by researchers projects that, in a central scenario without additional support beyond carbon pricing, green hydrogen demand could fall 83% below the 2030 European target and 43% below the 2050 target.
The result suggests that increasing production capacity does not, in itself, guarantee the creation of sufficient consumers to absorb it.
The industrial map could define the next stage
The study proposes that instruments such as Hydrogen Valleys, European Hydrogen Bank auctions, and investments in hydrogen corridors more accurately incorporate the relationships between potential consumers.
The logic is to shift part of the focus from the individual capacity of each project toward its ability to stimulate adoption in nearby facilities.
For the industry, this introduces an additional variable in the planning of electrolyzers, networks, storage, and hydrogen supply: consumer location can carry as much strategic weight as production cost.
A facility located next to an industrial hub with multiple potential users could create conditions for new projects to emerge without each one depending on an independent subsidy.
SOURCE: https://www.energylivenews.com/
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