The Middle East is shifting from oil to green hydrogen, leveraging cheap solar, wind, and strong infrastructure to become a global leader. With mega-projects like NEOM and government backing, the region has the edge, but must tackle costs, water scarcity, and sustainability to stay ahead

For centuries, the Middle East has been at the center of global trade and energy. From the days of ancient trade routes to becoming the world's biggest oil exporter after the first major discovery in Iran in 1908, the region has shaped the global energy story like no other. But today, a new chapter is unfolding, one where the Middle East isn't just about oil, but about green hydrogen.

Countries like Saudi Arabia, the UAE, Oman, and Qatar are reimagining their future. Instead of clinging to fossil fuels, they're putting serious money and strategy into becoming leaders in the hydrogen economy. And this isn't just about energy exports, it's about transforming economies, attracting investment, and meeting global decarbonization goals.

Why Green Hydrogen Matters

So, what makes green hydrogen so exciting? For starters, it's one of the most versatile clean fuels out there. It can power electricity, heating, transport, and industry, especially the tough-to-decarbonize sectors like steel, cement, and shipping.

The International Energy Agency's 2024 Global Hydrogen Review shows global hydrogen demand hit 97 megatons (Mt) in 2023, up 2.5% from 2022. But here's the catch: most of it still comes from fossil fuels. Truly "green" hydrogen, made using renewable energy, is still under 1 Mt. Electrolyzer capacity is growing fast (520 GW already lined up for 2030), but scaling it up at competitive costs remains the big challenge.

The Cost Advantage: Sunshine, Wind, and Geography

If you're wondering why the Middle East is so well-positioned, the answer is simple: it's cheap to make hydrogen here. With world-beating solar and wind resources, the region can generate renewable energy at some of the lowest costs globally.

Saudi Arabia set a world record in 2021 with a solar PPA at just $0.0104/kWh. The Al Sadawi Solar PV Project is expected to continue this trend with costs as low as $0.0129/kWh. Compare that to Europe, where hydrogen production costs are $9.88 to $14.31 per kg versus just $6.54 to $12.66 per kg in the Middle East, and you see the edge.

Add to this vast undeveloped land, existing energy infrastructure, and well-placed ports like Dubai, Sohar, and Yanbu, and the region has all the ingredients to become a global green hydrogen hub.

Mega-Projects and Global Partnerships

• Saudi Arabia's NEOM Project: An $8.4 billion investment to build the world's largest green hydrogen plant, expected to produce 600 tons daily by 2026.


• UAE's Hydrogen Roadmap: Ambitious goals for 2050, with Masdar teaming up with Siemens Energy and Lufthansa to push hydrogen for transport.


• Oman's Vision 2040: Plans for a 25 GW wind-solar electrolyzer cluster.

These projects are backed by heavyweight investors like ACWA Power and Air Products and are already shaping global partnerships. Germany's SEFE, for example, is teaming up with NEOM to bring Middle Eastern hydrogen to Europe.

The Challenges Ahead

• Rising Costs: NEOM's budget has already ballooned 70% from its original $5 billion.


• Water Scarcity: Electrolysis needs water, and desalination isn't without environmental costs.


• Geopolitics: Tensions in the region could disrupt exports, just as they have with oil in the past.


• Global Competition: Australia, Chile, and others are also racing to claim leadership in the hydrogen market.

Sustainability and Credibility

Here's the kicker: being cheap isn't enough. For hydrogen to truly be "green," it has to come from new renewable sources, not just existing grids. Plus, the production, storage, and shipping processes carry their own carbon costs.

This is why transparency and certification matter. Without strict sustainability standards, the "green" hydrogen label risks losing credibility. If the Middle East can lead not just in low-cost production but also in responsible, verifiable green practices, it can secure a dominant global role.

The Road Ahead

The race to lead the hydrogen economy is on, and the Middle East is in pole position. With its unmatched natural resources, government backing, and mega-projects already underway, the region could be the world's next big clean energy powerhouse.

But success won't be handed to it. It will take investment, transparency, and a relentless focus on sustainability to prove that hydrogen from the Middle East is not just affordable but also trustworthy and truly green.