As the global race toward net-zero intensifies, clean hydrogen is emerging as a critical pillar in the transition to low-carbon energy systems. Among the most promising variants are blue hydrogen—produced from natural gas with carbon capture—and green hydrogen—generated using renewable energy.
Both forms offer not only pathways to decarbonize hard-to-abate sectors like heavy industry and transportation but also open up lucrative opportunities for countries and companies to establish themselves as exporters of sustainable energy.
For the Gulf Cooperation Council (GCC), green hydrogen is more than a climate solution—it represents a strategic pivot. With abundant solar resources, vast reserves of natural gas, and decades of experience in energy production and export logistics, the region is gearing up to lead the hydrogen economy. Existing infrastructure, robust trade relationships and a growing regional appetite for clean energy further strengthen the case for hydrogen as a future export commodity.
As GCC countries move to diversify their economies and reduce their dependence on oil, one question arises: can green hydrogen become the next major pillar of the region’s energy export strategy?
Global hydrogen demand to surge to 430 million tons by 2050
Green hydrogen’s momentum is growing as a clean energy vector, contributing to the global shift towards net-zero. The International Energy Agency (IEA) expects global hydrogen demand to grow from 95 million tons in 2022 to 430 million tons by 2050, with industry remaining the largest consumer of hydrogen.
Emerging applications, especially in the transport sector, will likely expand green hydrogen demand. Fuel-Cell Electric Vehicles (FCEVs) and fuel cells for maritime transport will also contribute significantly to global demand by 2040.
The Middle East is actively set, along with the Latin American and African regions, to produce over 4 million tons of electrolytic hydrogen by 2030, often for export purposes.
In particular, GCC countries could generate as much as $200 billion in revenue from green hydrogen by 2050, with the creation of up to 1 million jobs in the region, according to a report by Roland Berger and Dii Desert Energy. Under the report’s most aggressive scenario, GCC countries would produce and export green hydrogen and derivatives, such as green ammonia or power fuels, to Europe and East Asia markets, resulting in potential annual revenues of $120-200 billion by 2050.
Production costs remain key challenge
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 ready 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, says the Gulf Petrochemicals and Chemicals Association (GPCA). 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 $600 to $2,500 per kilowatt (kW), depending on location.
According to the GPCA, grey hydrogen production costs range between $0.98-2.90 per kg, while blue hydrogen costs generally fall between $2.8-3.5 per kg, depending on natural gas prices, which average between $6-11 per MMBtu. Green hydrogen, currently the most expensive to produce, has costs ranging from $4.10-7 per kg.
Therefore, 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.
GCC green hydrogen production costs to drop
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 will 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 $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, says the GPCA.
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.
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Saudi Arabia, UAE to become global players in hydrogen market
In the GCC region, Saudi Arabia, the UAE and Oman showcase robust production potential, ranging from 650 to 900 TWh of hydrogen.
Saudi Arabia kicks off hydrogen and ammonia projects
Saudi Arabia is gearing up to become a significant player in the global hydrogen market, with plans to export green ammonia from the NEOM project by 2025. The country boasts immense potential for low-cost green hydrogen production, though its domestic demand is anticipated to fall short of the vast production capabilities, says a Gulf Research Center analysis.
Early efforts in hydrogen and ammonia projects, such as those in NEOM, have already commenced. While blue hydrogen remains a short-term possibility, the nation’s focus is shifting toward long-term green hydrogen solutions.
UAE advances hydrogen efforts with Germany
With a strong commitment to renewable energy uptake, the UAE is also seeking to significantly contribute to the global hydrogen market, aiming to capture a remarkable 25 percent share by 2030. Collaborative efforts are underway, as exemplified by the joint declaration of intent signed between the UAE and Germany in November 2021, signaling a shared interest in clean hydrogen and its derivatives.
The UAE has also approved a new national hydrogen strategy with the goal of becoming one of the world’s top green hydrogen producers. By 2031, the UAE plans to produce 1.4 million tons of green hydrogen per year, increasing this to 15 million tons by 2050. The strategy includes the development of two hydrogen production hubs by 2031, with three more planned by 2050. Additionally, the UAE aims to establish a green hydrogen research and development center by 2031 and increase renewable energy generation to 30 percent of the total energy mix by 2031.
With that being said, the GCC is well-positioned to emerge as a global hub for clean hydrogen production, thanks to its rich natural gas reserves, abundant renewable energy sources and advanced infrastructure. Both blue and green hydrogen present valuable opportunities for the region—blue hydrogen offers a practical short-term pathway, while green hydrogen holds substantial long-term promise.
To fully capitalize on this potential, the region must make substantial investments in research, infrastructure and supportive policy frameworks. By accelerating progress in these areas, the GCC can significantly contribute to the global clean energy shift, while also fostering new industries, creating employment and diversifying its economic base.
