The Gulf Cooperation Council (GCC) green hydrogen industry is poised for accelerated growth, fueled by improved economic activity. The latest World Bank GCC Economic Update projects that the six-nation bloc’s economy will grow by 4.2% between 2025 and 2026, driven by ongoing economic diversification and strategic reforms.

GCC countries aim to utilize hydrogen extensively to decarbonize their hardest-to-abate sectors. An analysis by Strategy& projects that the global demand for green hydrogen could reach 530 million tons by 2050, accounting for about 7% of primary energy consumption. The Middle East, Latin America, and Africa can play a leading role, with plans to produce over 4 million cumulative tons of electrolytic hydrogen by 2030.

Saudi Arabia and Oman are particularly well-positioned to harness their vast photovoltaic (PV) and wind energy potential, especially in coastal regions such as the Red Sea. Meanwhile, the UAE and Kuwait are leveraging their renewable energy resources to drive hydrogen production, aiming to establish themselves as major players in the global hydrogen market.

Saudi Arabia’s $8.4 billion Neom green hydrogen project can become the world’s largest utility-scale hydrogen facility powered entirely by renewable energy if it stays on schedule. The project is 60% complete and is expected to commence full operations by the end of 2026.

Industry analysts believe that the transition from ambitious plans to tangible results is already well underway. Saudi Arabia’s $8.4 billion Neom green hydrogen project is on track to be the world’s largest utility-scale hydrogen facility powered entirely by renewable energy. With 60% of the project already complete, it is slated for full operation by the end of 2026.

In addition, Saudi Arabia’s Public Investment Fund (PIF) has established a new entity, the Energy Solutions Company, which will focus on investing up to $10 billion in the production of green hydrogen.

Launched in May 2021, Dubai’s Electricity and Water Authority’s (DEWA) Green Hydrogen project has produced 90 tons of green hydrogen. This project can generate hydrogen at approximately 20 kg/h. It uses stored solar energy to produce electricity through a hydrogen gas motor at night, reducing approximately 450 tons of CO2 emissions.

According to the latest Hydrogen Council report, projects reaching the Final Investment Decision (FID) have surged tenfold recently. Today, more than $75 billion worth of hydrogen projects have achieved FID with minimal cancellations.

In recent years, the GCC hydrogen market has seen a surge in international players, accompanied by a rapid expansion in the number of projects. The GCC’s energy profile, utilizing wind at night and sun during the day, provides steady renewable energy inputs that are well-suited for electrolyzers producing hydrogen.

According to S&P Global, the Arabian Gulf region can produce green hydrogen for as low as $1.50/kg by 2030, making the region a competitive global exporter.

“If we are to meet our carbon budgets and get to net zero by 2050, things need to accelerate. And there is no route to net zero without hydrogen,” says Eugene McKenna, senior vice president for hydrogen and sustainable technologies at Johnson Matthey (JM). “The hydrogen journey must pick up momentum, and we are seeing the groundwork being laid for that acceleration.”

However, unlocking the full potential of hydrogen requires regulatory alignment. Industry players have consistently called for clearer frameworks to incentivize production, facilitate infrastructure development, and promote international trade.

McKenna argues that the green hydrogen economy is not just about production, pointing out the need for a complete ecosystem to drive meaningful progress. To support this, infrastructure for transport, storage, and conversion will be a priority, especially given the GCC’s aspirations to lead the hydrogen export market.

Green hydrogen’s potential to replace fossil fuels in hard-to-abate sectors such as heavy industry, shipping, and aviation makes it critical for energy transition. Regional governments, international energy companies, and technology providers are forming partnerships to utilize this potential.

In November this year, Saudi Arabia announced it had joined the International Partnership for the Hydrogen and Fuel Cell Economy initiative to support international efforts to develop the hydrogen sector.

“The groundwork is ready. What comes next is acceleration, and we are finally set to see it happen with the right technologies, policies, and economic strategies,” says McKenna during a recent discussion with Mercom India at ADIPEC 2024.

Technology Driving Efficiency and Growth

Electrolyzers, which split water into hydrogen and oxygen, are central to green hydrogen production. Among the leading technologies are alkaline water electrolysis and the more recent proton exchange membrane (PEM) electrolysis, which offers greater flexibility to handle variable renewable energy inputs.

However, PEM’s widespread adoption faces challenges, specifically the cost and availability of iridium, a rare platinum group metal critical for PEM catalysts. Efforts to reduce costs include scaling electrolyzer production and improving efficiency through research and development. For example, increasing the durability of electrolyzers will help reduce operational costs, making green hydrogen more commercially viable.

Breakthroughs in solid oxide electrolyzers, which operate at higher temperatures and efficiencies, are emerging as a promising technology for industrial applications, complementing the capabilities of PEM systems.

However, green hydrogen remains the long-term goal. Achieving cost parity for this technology with conventional energy sources will require economies of scale and strong regulatory support.

Countries in the GCC are increasingly aligning regulations to encourage public-private partnerships, incentivize investment, and scale hydrogen production. Saudi Arabia’s Vision 2030 and the UAE’s Net Zero by 2050 strategy outline commitments to decarbonization and clean energy adoption.

Policymakers in these countries are also exploring measures to streamline permitting processes, reduce financial barriers, and foster cross-border trade in hydrogen.

Technological and Logistical Challenges

The global hydrogen industry continues to face a significant challenge in the fragmentation of the electrolyzer technology value chain. Electrolyzers are intricate systems made of multiple interdependent components sourced from different manufacturers. This fragmentation leads to a siloed approach where many players try to cover as much of the value chain as possible to gain a competitive edge. However, this strategy may have slowed the progress in advancing the technology.

Lately, there has been a growing realization that faster development can be achieved by collaborating with others and focusing on core strengths within the value chain. This focus on collaborative innovation is expected to drive both performance improvements and cost reductions.

Transporting hydrogen over long distances is a critical logistical challenge. However, converting the hydrogen into ammonia can make it easier to transport. This hydrogen can be reconverted from ammonia or be used directly in industrial applications.

Several companies are also pioneering methanol production by combining green hydrogen with captured carbon dioxide. This process can decarbonize sectors that are difficult to electrify, such as chemicals and fuels, and enable the production of synthetic materials with far lower carbon emissions.

GCC: The Next Green Hydrogen Powerhouse?

The future of green hydrogen in the GCC depends on harnessing the region’s renewable energy potential and fostering collaboration across all sectors.

However, challenges such as supply chain inefficiencies and scaling electrolyzer production must be overcome to unlock green hydrogen’s potential fully.

This market offers abundant opportunities for continued engagement between technology providers, manufacturers, and policymakers, alongside strong government support to drive the next wave of growth and innovation in this space.