Figure 1: Global low-emission hydrogen milestones

Source: IEA (2023), GPCA Analysis (2025)

Despite these challenges, the GCC is an ideal region for future green hydrogen development. The regional economies, which are heavily dependent on oil and gas, are transitioning through diversification efforts such as Saudi Vision 2030. This transition will create opportunities for new economic models, including in hydrogen, and potentially 450,000 jobs in related manufacturing and construction sectors. These shifts also open avenues for hydrogen localization, playing a pivotal role in the GCC’s diversification.

Global hydrogen market outlook and GCC potential:

Hydrogen’s momentum is growing as a clean energy vector, contributing to the global shift towards net-zero. According to a 2023 International Energy Agency (IEA) analysis, global hydrogen demand is projected to grow from 95 million tons in 2022 to 430 million tons by 2050 (Figure 1), with the industry remaining the largest consumer of hydrogen. The refining sector follows closely, with hydrogen being used to reduce sulfur in diesel.

Emerging applications, especially in the transport sector, are set to expand hydrogen demand. Fuel-Cell Electric Vehicles (FCEVs) and fuel cells for maritime transport are expected to contribute significantly to global demand by 2040. Clean hydrogen is expected to capture 75% of global hydrogen demand by 2040, spurring trade flows and connecting regions with abundant renewable energy or low natural gas costs to demand hubs like Europe and Asia (Figure 2).

The GCC, strategically located between Europe and East Asia, has the advantage of connecting to key markets. Its vast solar resources mean that as green hydrogen production costs decrease, the region is poised to become one of the most cost-competitive hydrogen producers globally. The IEA predicts that the cost of green hydrogen production in the GCC could eventually drop to USD 1.8-2.0 per kg.

In addition to green hydrogen, blue hydrogen offers a pathway for the GCC, leveraging its vast natural gas reserves and Carbon Capture, Utilization, and Storage (CCUS) capabilities. The region’s established infrastructure for exporting blue hydrogen—such as via ammonia—positions it as a leader in low-carbon hydrogen production. The successful shipments of blue ammonia from Saudi Arabia to Japan and South Korea in 2020 and 2022 highlight the region’s efforts to establish a global hydrogen market.

Figure 2: Projected clean hydrogen trade flows in 2050 (Mt per year of hydrogen equivalent)

Source: McKinsey & Company (2024)

Figure 3: GCC countries’ carbon capture targets

Source: GPCA Analysis (2025)

Blue hydrogen strategies for the GCC:
Blue hydrogen is produced via steam methane reforming (SMR) of natural gas, with the resulting carbon emissions captured and stored through CCUS technology. This method is already well-established in the GCC, capturing a total of 3.7 mtpa and accounting for 10% of total global carbon captures. This makes it a more immediate solution for low-carbon hydrogen production compared to green hydrogen.

The GCC has considerable potential to become a market leader in blue hydrogen. Saudi Arabia, Qatar, and the UAE, with large-scale CCUS facilities, are already major contributors to global CCUS capacity and the region is expected to capture over 60 million tons of CO₂ annually by 2035 (Figure 3). The region’s existing infrastructure allows it to quickly scale up blue hydrogen production and export, making it a key player in global low-carbon fuel markets.

However, blue hydrogen’s development requires substantial investment, particularly in CCUS infrastructure. GCC countries must align their national strategies to foster blue hydrogen and CCUS growth. Policymakers should create frameworks that encourage financial investment in these sectors, as only the UAE has currently implemented a formal blue hydrogen policy. Strengthening carbon regulations and establishing regional infrastructure for CCUS would expedite blue hydrogen adoption in the region.

Green Hydrogen in the GCC:
Green hydrogen, generated from renewable energy sources like solar power, is regarded as the most sustainable hydrogen option. The GCC, with its abundant and low-cost solar energy resources, is well-positioned to become a leading producer of green hydrogen. In 2023, solar power in the GCC became the lowest-cost electricity generation source, outpacing natural gas, oil, and coal. This presents a significant opportunity for green hydrogen production.

However, producing green hydrogen remains costly, mainly due to the high expense of electrolyzers needed for water electrolysis. While the cost of solar energy is low, electrolyzer costs remain high, with prices ranging from USD 600 to USD 2,500 per kilowatt (kW) depending on location. Additionally, scaling up hydrogen production, storage and transport technologies requires continued R&D. The use of salt caverns for hydrogen storage is an area with significant potential in the GCC, given its geographic advantages.

To accelerate the green hydrogen supply chain, the GCC must focus on policies, investment, and R&D. Governments should develop national hydrogen strategies that encourage public-private partnerships and align with the region’s clean energy goals. The region should also focus on increasing the efficiency and reducing the cost of electrolyzers, with R&D playing a crucial role in driving technological improvements.

Figure 4: Key strategies for GCC green hydrogen development

Source: GPCA Analysis (2025)

R&D and the role of academia:
R&D is key to reducing the cost of green hydrogen production. By improving electrolyzer efficiency and scaling up renewable energy integration, the GCC can drive down hydrogen production costs. High-efficiency electrolyzers are already more efficient than steam methane reforming (SMR) units, and with further development, they can achieve longer operational lifespans, making them more competitive. R&D should also focus on integrating solar energy more effectively into hydrogen production systems and exploring storage technologies like salt caverns (Figure 4).

The GCC is already investing in R&D to drive hydrogen innovation. The region’s academic institutions are engaging in joint projects with the petrochemical industry to accelerate hydrogen technology advancements. Incentives for R&D can help attract regional talent, fostering collaboration between academia, industry, and governments. As the hydrogen economy expands, the demand for skilled professionals will increase, making it critical for the GCC to develop a workforce equipped with the necessary expertise.

Hydrogen Projects in the GCC
The GCC is home to some of the world’s most advanced hydrogen projects. Saudi Arabia’s NEOM project, developed in partnership with ACWA Power and Air Products, is set to become the largest green hydrogen project globally. This project benefits from low-cost solar energy and aims to produce green hydrogen at a cost of USD 1.5-1.95 per kg. NEOM’s strategic location also makes it ideal for hydrogen export.

In the UAE, the Dubai Electricity and Water Authority (DEWA) and Siemens Energy inaugurated an industrial-scale green hydrogen plant in 2020, which integrates electrolyzers, storage, and re-electrification capabilities. This pilot facility demonstrates the viability of producing, storing, and using green hydrogen at scale, setting the stage for future commercial applications. These projects show the GCC’s commitment to becoming a leader in green hydrogen production and export (Table 1).

Table 1: GCC hydrogen projects

Source: GPCA Analysis (2025)

Conclusion
The GCC has a unique opportunity to become a global leader in clean hydrogen production, driven by its vast natural gas reserves, abundant renewable energy resources, and world-class infrastructure. Both blue and green hydrogen hold promise for the region, with blue hydrogen serving as a near-term solution and green hydrogen offering long-term potential. However, significant investments in R&D, infrastructure, and policy development are required to unlock the full potential of hydrogen in the GCC. By continuing to advance these efforts, the region can play a pivotal role in the global transition to clean energy, creating new jobs, industries, and economic opportunities along the way.

[1] “Hydrogen: Net-zero emissions guide”- IEA (2023)

[2] “Global Energy Perspective 2023: Hydrogen outlook”- McKinsey and Company (2024)

[3] “Natural Gas Reserves by Country”- Worldometer (2025)