Aligning with global trends, GCC countries have also outlined ambitious clean energy transition plans. For GCC member countries, predominantly reliant on hydrocarbon revenues, the clean energy transition presents both significant challenges and unprecedented opportunities. This article highlights the drivers of the clean energy transition, its regional impact, and the progress in adopting renewables, blue and green hydrogen to meet global clean energy commitments.

Drivers for clean energy transition in the GCC

Several interconnected factors are propelling the clean energy transition globally and within the GCC region:

1. Climate change imperative: The Paris Agreement’s goal of limiting global warming to well below 2°C, preferably to 1.5°C, requires a rapid decarbonization of the energy sector. To meet this goal, countries must shift away from fossil fuels and move toward cleaner energy sources. This global pressure is increasing on all nations, including those in the region, to actively participate in mitigation efforts. GCC countries have made various commitments under their Nationally Determined Contributions (NDCs) as part of the Paris Agreement. Countries like UAE, Saudi Arabia, and Oman are leading clean energy efforts, aiming for net zero by 2050–2060. Others — Qatar, Kuwait, and Bahrain — have pledged emission cuts of 25%, 7.4%, and 30%, respectively. While renewables and green hydrogen are central to the GCC’s clean energy transition, other solutions like CCUS, efficient power generation, reduced flaring, and energy demand management will also play key roles in meeting their climate goals.

2. Technological advancements and cost reductions: Significant breakthroughs in renewable energy technologies, particularly solar and wind power, have led to substantial cost reductions and increased efficiency. Battery storage technologies are also rapidly improving, addressing the intermittency challenges associated with renewable sources. These advancements have made clean energy increasingly competitive with traditional fossil fuels.

3. Opportunities for value addition and revenue diversification: For the GCC countries, while being major energy exporters, adopting renewable energy for domestic consumption can free up more hydrocarbons for export. The GCC region is not only a major producer of crude oil and natural gas but also a global leader in the petrochemical industry. By using renewable energy for domestic & regional electricity demand, GCC countries can prioritize the allocation of crude oil and natural gas to their growing petrochemical sector. This enables them to produce higher-value, in-demand products, strengthening their position in a market that is expected to see continued growth, even as global demand for transport fuels shifts.

4. Economic diversification: GCC member countries are actively pursuing economic diversification strategies with an intent to reduce their dependency on fossil fuel revenues and build a foundation for sustainable growth and long-term economic resilience. Investing in clean energy and related technologies presents new avenues for economic growth, job creation, and technological innovation. This diversification is crucial for ensuring long-term prosperity in a carbon-constrained world.

5. Global decarbonization mandates: Several other global trends are also impacting the evolution of the energy sector in the GCC region. Europe’s push for decarbonization is reducing fossil fuel use and driving demand for alternatives like green steel and green aluminum. In Asia, cleaner options such as natural gas and clean hydrogen are emerging as substitutes for coal and oil. Considering these major energy import markets, GCC countries have and are expected to strategically work towards expanding their natural gas production and export capabilities while also laying the ground for the future supply of clean hydrogen and its derivatives.

Implications for GCC member countries

The clean energy transition carries significant implications, both positive and challenging, for the GCC member countries:

1. Job creation and skills development: The transition to a clean energy economy will necessitate the development of new skills and create jobs in renewable energy installation, maintenance, hydrogen production, and related sectors. Investing in education and training programs will be crucial to prepare the workforce for these new opportunities.

2. Infrastructure development: Transitioning to clean energy demands significant investment in infrastructure — including renewables, storage, hydrogen networks, and smart grids. This extends beyond generation and transmission to distribution and end-use, where technology integration and innovation are key to maximizing efficiency and cutting emissions.

3. Localization and new industrial/manufacturing opportunities: The clean energy transition is expected to create opportunities for manufacturing solar panels, wind turbines, electrolyzers for hydrogen production, and battery storage components amongst others. The petrochemical sector can also leverage its expertise to produce materials crucial for manufacturing these technologies locally. The development of a local market for renewable energy projects and a local value chain for technology, products and services are complementary. As demand gathers pace and a sizeable market for technology is created regionally, benefits would be realised for manufacturers and value chain participants. However, to maximise the socio-economic benefit of value chain localisation, it is important to accurately identify and anticipate the labour, materials, technology, policy and regulatory support required to ensure competitiveness of the region as a global manufacturing hub.

Progress in clean energy adoption

GCC member countries are increasingly recognizing the importance of the clean energy transition and are making significant strides in various areas:

1. Focus on renewable energy: Saudi Arabia and the UAE are expected to lead the region in renewable energy capacity expansion. While Saudi Arabia plans to have 50% of its installed energy capacity from renewables by 2030, the UAE seeks to achieve 30% clean energy (including nuclear) equivalent to 14.2GW by 2031. Likewise, Oman, Qatar, Kuwait and Bahrain have relatively smaller plans for renewable capacity addition, targeting 30%, 18%, 15% and 20% renewable based electricity, respectively between 2030 and 2035. Proposed developments in renewable energy capacity not only focus on meeting growing demand for sustainable electricity across the respective countries; but also seek to leverage competitive renewable electricity prices (which are currently amongst the lowest globally) for meeting regional electricity requirements through interconnection networks.

2. Focus on clean hydrogen: In the Middle East, hydrogen production is expected to increase to an estimated 19 million tons per annum by 2025, further expanding to an estimated 80 million tons by 2050.[2] Of the additional production capabilities, a significant portion of the investment is expected for the production of green and blue hydrogen, where GCC economies like Saudi Arabia, UAE and Oman have taken a lead. Leveraging their vast natural gas reserves and existing infrastructure, many GCC countries are also exploring blue hydrogen production. This involves producing hydrogen from natural gas and capturing the associated carbon dioxide emissions. ADNOC in the UAE and Saudi Aramco in KSA are actively pursuing blue hydrogen projects, aiming to become major exporters of low-carbon hydrogen. Carbon capture and storage (CCS) technologies are crucial for the viability of blue hydrogen, and investments in this area are growing.

3. Circular economy initiatives: Embracing circular economy principles is gaining traction in the region to reduce waste, conserve resources, and minimize environmental impact. This includes initiatives focused on plastic recycling, waste-to-energy projects, and the development of sustainable materials. The petrochemical industry within the GCC is exploring ways to integrate circular economy principles into its operations, such as chemical recycling of plastics.

The clean energy transition is an inevitable global shift with profound implications for the GCC member countries. While challenges remain in diversifying the region’s hydrocarbon-dependent economies, significant opportunities exist to leverage its resources, expertise, and strategic location to become leaders in the emerging clean energy landscape. Ongoing investments and ambitious visions in renewable energy, blue and green hydrogen, and circular economy initiatives demonstrate a clear commitment to navigating this transition successfully. By embracing innovation, fostering collaboration, and implementing strategic policies, the GCC region can secure a global leadership position in a carbon-constrained world.

[1] International Energy Agency (IEA); World Energy Investment 2025, https://www.iea.org/news/global-energy-investment-set-to-rise-to-3-3-trillion-in-2025-amid-economic-uncertainty-and-energy-security-concerns

[2] https://hydrogencouncil.com/wp-content/uploads/2022/10/Global-Hydrogen-Flows.pdf