# Embodied energy trade: Unit economics

Why a small power price gap moves metal costs by hundreds

Source page: https://www.materialinsights.org/energy/e_embodied/economics/

What this tab covers What it costs to move a unit of energy this way: capital and operating costs, tariffs, utilisation and how it compares with the alternatives.

It is cheaper to ship the product than the energy because ocean freight is cheap per tonne while energy, especially electricity, is expensive to move far. A tonne of aluminium carries about 14 MWh of electricity, which no cable could carry across an ocean as cheaply as a ship carries the metal.

#### Key costs

| Measure | Value | Note |
|---|---|---|
| **Electricity in a tonne of aluminium** | about 14.1 MWh per tonne^[3](https://giz.de/en/downloads/giz2025-en-factsheet-aluminium-smelting-with-use-of-low-carbon-electricity.pdf) | So each USD 10/MWh price difference changes cost by about USD 141 per tonne (calculated) |
| **Embodied CO2 priced by CBAM from 2026** | about 15.1 (global average, 2022) t CO2e per tonne of primary aluminium^[1](https://think.ing.com/articles/green-aluminium-bundle-understanding-aluminiums-emissions)^[23](https://trade.ec.europa.eu/access-to-markets/en/news/start-definitive-period-cbam-eu) | Phased in as EU free allowances end by 2034 |
| **Green iron cost at best sites** | about 390 USD per tonne^[9](https://rmi.org/green-iron-corridors-a-new-way-to-transform-the-steel-business/) | High-grade ore plus strong renewables, RMI modelling |
| **Saving from importing green iron versus domestic production** | 5 to 40% of clean steel cost^[9](https://rmi.org/green-iron-corridors-a-new-way-to-transform-the-steel-business/) | RMI modelling; Germany is an illustrative case |
| **Moving hydrogen 10,000 km as ammonia or LOHC** | 2.5 to 4.5 (2030); 0.7 to 1.2 possible by 2050 USD per kg H2^[7](https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2022/Apr/IRENA_Global_Trade_Hydrogen_2022.pdf) | Transport and conversion, excluding production; about USD 75 to 135 per MWh at 33.3 kWh per kg (calculated) |
| **Green hydrogen cost at best sites, 2050** | 0.65 to 1.15 USD per kg H2^[8](https://www.irena.org/Energy-Transition/Technology/Hydrogen/Global-hydrogen-trade) | IRENA optimistic and pessimistic scenarios |

#### Where the money goes

| Item | Share or amount |
|---|---|
| **Renewable hydrogen in green steel cost** | 15 to 40%^[9](https://rmi.org/green-iron-corridors-a-new-way-to-transform-the-steel-business/) |
| **Ammonia synthesis energy (share of hydrogen energy)** | 12 to 26%^[7](https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2022/Apr/IRENA_Global_Trade_Hydrogen_2022.pdf) |
| **Ammonia cracking energy if reconverted (share of hydrogen energy)** | 13 to 34%^[7](https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2022/Apr/IRENA_Global_Trade_Hydrogen_2022.pdf) |

Siting follows the cheapest firm energy: Iceland (hydro and geothermal), the Gulf (gas) and China (mostly coal) all smelt aluminium. Shipping energy of well under 1% of total embodied energy (calculated) is small next to differences in power prices between regions. From 2026 the EU carbon border charge adds a cost that depends on how the embodied energy was generated. For computing, the trade-off is latency rather than freight.

#### Sources

1. [Green aluminium bundle: understanding aluminium's emissions (using IAI data)](https://think.ing.com/articles/green-aluminium-bundle-understanding-aluminiums-emissions) ING Think, 2024
2. [Factsheet: Aluminium smelting with use of low-carbon electricity](https://giz.de/en/downloads/giz2025-en-factsheet-aluminium-smelting-with-use-of-low-carbon-electricity.pdf) GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit), 2025
3. [Global Hydrogen Trade to Meet the 1.5 C Climate Goal: Technology Review of Hydrogen Carriers](https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2022/Apr/IRENA_Global_Trade_Hydrogen_2022.pdf) IRENA, 2022
4. [Global hydrogen trade](https://www.irena.org/Energy-Transition/Technology/Hydrogen/Global-hydrogen-trade) IRENA, 2022
5. [Green iron corridors: a new way to transform the steel business](https://rmi.org/green-iron-corridors-a-new-way-to-transform-the-steel-business/) RMI, 2024
6. [Start of the definitive period of the CBAM in the EU](https://trade.ec.europa.eu/access-to-markets/en/news/start-definitive-period-cbam-eu) European Commission, Access2Markets, 2026

## Other sections

- [Summary](https://www.materialinsights.org/energy/e_embodied/index.md)
- [Overview](https://www.materialinsights.org/energy/e_embodied/overview/index.md)
- [Correlation](https://www.materialinsights.org/energy/e_embodied/correlation/index.md)
- [How it works](https://www.materialinsights.org/energy/e_embodied/explain/index.md)
- [Efficiency and losses](https://www.materialinsights.org/energy/e_embodied/efficiency/index.md)
- [Technology advances](https://www.materialinsights.org/energy/e_embodied/advances/index.md)
- [Value chain](https://www.materialinsights.org/energy/e_embodied/valuechain/index.md)
- [Geopolitics and regulation](https://www.materialinsights.org/energy/e_embodied/geopolitics/index.md)
- [Impact on the biosphere](https://www.materialinsights.org/energy/e_embodied/biosphere/index.md)
- [Relationships](https://www.materialinsights.org/energy/e_embodied/links/index.md)