Analysis of the potential for green hydrogen and related commodities trade

The global energy landscape is undergoing a transformative shift driven by the urgent need to mitigate climate change while ensuring secure and affordable energy supply. The International Renewable Energy Agency’s 1.5^°C Scenario presents an energy transition pathway aligned with achieving the Paris Agreement targets. It identifies a set of solutions that can be scaled up to limit global temperature rise to 1.5^°C by 2050 in a secure and affordable way. Green hydrogen, produced via water electrolysis powered by renewable energy sources, will play a crucial role in this effort and in coupling different energy subsectors.

The trade of green hydrogen and its commodities can strengthen industrial competitiveness in consuming regions by creating opportunities for accessing affordable green hydrogen and its derivatives. At the same time, it can support economic development and diversification in producing regions. By offering an opportunity for countries to cost-effectively access green commodities from locations with abundant resources where production costs can be lower.

This analysis aims to explore the tecno-economic potential for the trading of green hydrogen and its associated commodities such as ammonia, e-methanol and direct reduced iron (DRI) in 2050, using a cost-optimisation approach. It builds on IRENA’s 2022 work on hydrogen trade, integrating updated assumptions which reflect the evolving market dynamics, and policy developments.

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