Europe
July 8, 2025

IRENA projects Europe as the epicentre of green hydrogen imports: USD 2.49 trillion in global infrastructure investment required

A new report from IRENA anticipates that international trade in green hydrogen and its derivatives could represent up to 20% of global demand by 2050. The study identifies Europe as the key import region and highlights Latin America, Africa and the Middle East as leading exporters.
By Strategic Energy

By Strategic Energy

July 8, 2025
Europe launches the H2 Mechanism: A milestone towards an integrated hydrogen market

International trade in green hydrogen and its derivatives could meet up to 20% of global demand by 2050, according to the latest report published by the International Renewable Energy Agency (IRENA). The study focuses on ammonia, e-methanol and direct reduced iron (DRI) as primary vectors for hydrogen transport, given their greater efficiency compared to pure hydrogen.

“Hydrogen-based green commodity trade will account for between 73% and 80% of total projected green hydrogen trade,” IRENA states, mainly due to lower transport costs and conversion efficiency gains.

Massive investments and infrastructure needs

Meeting this projected demand will require an estimated USD 2.49 trillion in infrastructure investment, which includes 4.7 TW of renewable energy capacity, 2.1 TW of electrolysers and 0.9 TWh of battery storage. Nearly half of the capital will be allocated to renewable power generation, followed by conversion facilities and transport systems.

“This infrastructure must be built from near-zero levels today to supply 260 million tonnes of hydrogen equivalent by 2050,” the report emphasises.

Exporters and importers: a reshaped global map

Under a scenario where all countries share the same financing conditions (Same WACC Scenario), Latin America, sub-Saharan Africa, the Middle East and North Africa emerge as the most competitive exporting regions, owing to abundant renewable resources and low production costs.

Europe is projected to become the largest green hydrogen import market, along with Japan, South Korea and Southeast Asia, due to high domestic production costs.

“North Africa alone could supply up to 18% of Europe’s total demand for green hydrogen and derivatives in 2050,” IRENA estimates, with export volumes including 5 Mt H2-eq in ammonia, 3.2 Mt as compressed hydrogen, and 0.8 Mt in methanol.

Financing conditions reshape the outlook

A second scenario (Differentiated WACC Scenario) introduces country-specific risk profiles and weighted average cost of capital (WACC), which drastically changes trade dynamics. Australia, China and the United States emerge as major exporters under these conditions, surpassing regions with better resources but weaker financial profiles.

“The cost of capital is a decisive factor in green hydrogen competitiveness,” IRENA warns. Variations in WACC directly affect trade flows, even among countries with similar renewable energy potential.

Commodity-specific insights

Ammonia will dominate green hydrogen trade, covering 30% of global demand through imports, followed by e-methanol at 18%, gaseous hydrogen at 14.4% and DRI at 14%.

For DRI, Latin America, Africa and the Middle East will play key roles in global supply. In contrast, Europe may prioritise imports over domestic production or raw material imports, based on cost optimisation.

For e-methanol, access to biogenic carbon is critical. “Regions with strong renewables but limited carbon sources will find it more economical to import methanol rather than produce it using costly direct air capture (DAC),” the report explains.

Policy frameworks and international cooperation

Realising this green hydrogen trade scenario requires “robust policy support and international coordination”, IRENA stresses. Certification schemes, carbon pricing mechanisms, trade partnerships and targeted public procurement will be essential to developing a global hydrogen economy.

“Stable demand creation and infrastructure development will depend heavily on regulatory action,” the agency concludes.

As of October 2024, 56 countries plus the European Union and ECOWAS have adopted hydrogen-specific policies, while at least 21 more are in the process of formulating strategies. The EU’s Carbon Border Adjustment Mechanism (CBAM) is already creating incentives for clean hydrogen production and trade.

Final remarks

Green hydrogen trade will be a cornerstone of the global energy transition, enabling access to clean energy, diversifying supply chains and reducing dependence on fossil fuels. However, it will require timely investment, smart policies and global collaboration.

“This report provides an early-stage roadmap for identifying potential trade partners and infrastructure requirements for hydrogen and green commodities,” IRENA concludes. The opportunity is clear—what remains is swift and strategic action.

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