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Moving energy: wires, pipes and ships: New carriers, the cost of distance and chokepoints

Understanding Energy / Module 9: Moving energy: wires, pipes and ships Part 4 of 4

New carriers, the cost of distance and chokepoints

The energy transition adds new things to move, notably hydrogen and low-temperature heat, and puts more weight on wires. Comparing carriers on a common basis, cost per MWh moved 1,000 km, shows why some trades are almost free and others barely make sense. It also shows how much risk sits in a few narrow places.

4.1 Hydrogen is easy to pipe and hard to ship

Hydrogen holds more energy per kilogram than any fuel, about 120 MJ, but it is so light that a cubic metre at normal pressure holds very little. To move it in bulk there are three options, each a trade between how tightly it is packed and how much energy the packing costs.

The first is a pipeline at 70 to 100 bar, the cheapest option over land. Compressing 10 GW of hydrogen to move it 1,000 km uses well under 1% of the energy carried, and the European Hydrogen Backbone study estimated transport costs of about EUR 0.11 to 0.21 per kg per 1,000 km. Old gas pipes can often be converted, which cuts investment sharply: Germany's approved 9,040 km core network, costing EUR 18.9 billion, is about 60% converted gas pipe. But the steel must be checked for embrittlement, and hydrogen leaks more easily than methane.

The second is liquid hydrogen at minus 253 C. Liquefaction uses 30 to 36% of the hydrogen's energy with today's plants, and the liquid boils off at 0.05 to 0.25% a day.

The third is to bind hydrogen into a carrier such as ammonia, methanol or a liquid organic carrier. Ammonia liquefies at minus 33 C and is already shipped worldwide for fertiliser. But making ammonia uses 12 to 26% of the hydrogen's energy and cracking it back uses another 13 to 34%, so up to about half can be gone by the time pure hydrogen is recovered. That is why many export projects plan to use the ammonia directly, in fertiliser plants, ship engines or power stations.

Ambition still outruns construction. The IEA counts over 40,000 km of hydrogen pipelines announced to 2035, of which only about 9% are operating or committed. Shipping pure hydrogen costs at least USD 2 per kg including conversion, comparable to the cost of making it cheaply. The tile "Hydrogen and hydrogen carriers" sets out each route.

Process flowchart Shipping hydrogen as ammonia
Inputs Hydrogen from electrolysis100 units of energy Process steps 1 Ammonia synthesis

hydrogen combined with nitrogen; uses 12 to 26% of the hydrogen energy

2 Ship as liquid ammonia

minus 33 C at normal pressure; small losses

3 Cracking back to hydrogen

uses 13 to 34% of the hydrogen energy

Outputs Hydrogen at the destinationabout 50 to 75 units (calculated)

Using the ammonia directly, without cracking, avoids the last loss.

Source: IRENA, Global hydrogen trade to meet the 1.5C climate goal, Part II: Technology review of hydrogen carriers (2022), https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2022/Apr/IRENA_Global_Trade_Hydrogen_2022.pdf

4.2 Heat networks move warmth across a city, not a continent

Heat is the hardest form of energy to move far. It leaks through every pipe wall, all day, whether or not anyone is buying it. So heat travels across towns rather than countries, in district heating and cooling networks: insulated pipes that carry hot water, or steam in older systems, from central plants to buildings and bring the cooled water back to be reheated.

Europe has about 17,000 such networks with nearly 190,000 km of pipe, serving around 70 million people. In Denmark, Sweden and Finland they heat most city buildings. Their great advantage is flexibility of source. One network can take heat from a combined heat and power plant, a waste incinerator, a large heat pump drawing on sewage or seawater, factory waste heat, a data centre or a solar thermal field, and switch between them as prices change. In 2021 renewables and waste heat supplied more than 40% of the energy fed into European district heating. Large insulated water tanks attached to networks also make them cheap places to store heat for days.

Losses are measured over a year rather than per kilometre. Well-run networks in western and northern Europe lose about 8 to 15% of the heat they send out, older eastern European networks 15 to 25%, and sparse rural ones can lose over 40%. Pumping adds about 1% of the heat delivered as electricity. Newer fourth-generation designs supply water at 50 to 60 C instead of 80 C or more; running the same pipes at lower temperatures could cut heat loss by around 40%, and it lets heat pumps and low-grade waste heat feed in.

District cooling works the same way with chilled water and is growing fast in the Gulf, where cooling dominates building energy use. For dense new districts in hot Indian cities, where air conditioning drives the evening peak, it is an option worth examining. The "District heating and cooling networks" tile covers the technology.

4.3 The cost of distance differs a hundredfold between carriers

Putting every carrier on one basis, money per MWh of energy moved 1,000 km, shows a striking spread. The figures in the table are approximate and drawn from different places and years, so treat them as orders of magnitude, but the pattern is robust.

Big ships are cheapest. A VLCC moves crude for about USD 0.1 per MWh per 1,000 km in a normal market, and a Capesize bulk carrier moves coal for about USD 0.2 to 0.25. Large oil pipelines cost around USD 1 per MWh. Hydrogen pipelines would cost several times more, because hydrogen carries less energy per unit of pipe capacity. Electricity is the dearest bulk carrier. A Chinese ultra-high-voltage DC line recovers its capital for about USD 2 per MWh over 1,000 km, while a new 765 kV AC line in the United States works out at about USD 21 to 26 per MWh on the same basis, reflecting both higher construction costs and lower use.

LNG is different again, because most of its cost does not depend on distance. Liquefaction alone adds about USD 2 to 3 per MMBtu, or USD 7 to 10 per MWh, before a ship leaves port. That is why gas travels by pipe where it can and as LNG only where seas or politics block a pipe.

Three lessons follow. First, over very long distances it is usually cheaper to move fuel than electricity, which is why Japan imports LNG rather than power by cable, and why the proposed 3,800 km Xlinks cable from Morocco to Britain failed to win a government contract in 2025. Second, electricity's higher transport cost is offset by its value: it arrives ready to use, while fuels lose most of their energy in power stations and engines. Third, utilisation dominates: a line or pipe used half the time costs about twice as much per unit moved.

Data Approximate cost of moving energy 1,000 km
CarrierCost per MWh per 1,000 kmBasis
Crude oil by VLCCabout USD 0.1Normal-market freight, Gulf to China, early 2026
Coal by Capesize shipabout USD 0.2 to 0.25Western Australia to China benchmark rate, February 2026
Crude oil by large pipelineabout USD 1.2Toll for a full 1 million barrel a day line
Electricity by UHVDC (China)about USD 2.2Capital recovery only, Changji to Guquan
Hydrogen by pipeline (planned)about EUR 3 to 6European Hydrogen Backbone estimate, 2021
Electricity by new 765 kV AC (US)about USD 21 to 26Line cost only, 60% utilisation
LNG liquefaction (any distance)about USD 7 to 10Fee of USD 2 to 3 per MMBtu

All values are calculated from the cited sources and exclude energy losses; they mix years and regions and are orders of magnitude only.

Source: Calculated from Thunder Said Energy (2026), Breakwave Advisors (2026), Hitachi Energy and Power Line Magazine (2019-2020), European Hydrogen Backbone (2021), MISO cost guide via PUC Texas (2024) and Argus Media (2026), See module sources

4.4 Chokepoints concentrate the risk

Much of the world's traded energy passes through a few narrow places. The EIA's list is headed by the Strait of Malacca, with about 23 million barrels of oil a day in the first half of 2025, and the Strait of Hormuz, which carried about 21 million barrels a day in that period along with more than a fifth of world LNG trade. Bab el-Mandeb and the Suez Canal link the Red Sea to the Mediterranean; the Danish straits, the Bosporus and the Panama Canal also matter.

The year 2026 tested this system harder than any since the 1970s. After war broke out on 28 February, oil flows through Hormuz fell to an average of 2.7 million barrels a day from March to May. Dated Brent reached a record USD 144 a barrel in early April. Within two weeks IEA members agreed their largest ever emergency release, 400 million barrels. Bypass pipelines suddenly mattered: Saudi exports from the Red Sea port of Yanbu, fed by the East-West pipeline, rose from about 2 to over 5 million barrels a day by June, and the UAE's 380 km line to Fujairah carried about 1.8 million. Those lines then became targets themselves. Meanwhile attacks by Yemen's Houthis kept Suez and Bab el-Mandeb traffic far below normal, sending ships the long way around Africa.

Pipelines and cables have chokepoints of their own. A Russian strike at Brody in Ukraine stopped Druzhba crude flows to Hungary and Slovakia from late January to late April 2026. A ship's anchor damaged the EstLink 2 power cable between Finland and Estonia on Christmas Day 2024, and it was out of service for months.

For an importer such as India, which buys most of its crude and much of its LNG from the Gulf, the practical lessons are clear: diversify suppliers and routes, hold stocks, keep spare import terminal capacity, and value domestic energy, including power from local sun and wind, partly for the security it brings. Storage is the other half of the answer.

See it in the table

H₂O WaterSt SteelH2 HydrogenNH3 AmmoniaMeOH MethanolH2T Hydrogen and hydrogen carriersDHN District heating and cooling networksCHP Combined heat and power

Check your understanding

Which is generally the cheapest way to move a MWh of energy 1,000 km?

In a normal market a VLCC moves crude for about USD 0.1 per MWh per 1,000 km, far below any wire or pipe.

Why do many hydrogen export projects plan to use ammonia directly rather than crack it back to hydrogen?

Synthesis plus cracking can consume up to about half the hydrogen's energy, so skipping the cracking step saves a large loss.

In 2026, what let Gulf producers keep exporting some oil while Hormuz was largely closed?

The Saudi East-West line and the UAE line to Fujairah carry crude to ports outside the strait.
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