The Gulf can Anchor the Next Phase of Hydrogen Economy with Low-Cost Power, and Policy Clarity

Green hydrogen was meant to be the silver bullet for decarbonisation. It is a clean, versatile fuel that can power heavy industry, transport, and electricity without emissions. Yet, as industry leaders at the panel discussion titled ‘The Emerging Role of Gulf Nations in the Global Hydrogen Economy’ at ADIPEC 2025 acknowledged, progress has been slower than expected. Ambitious gigawatt-scale projects have struggled to move beyond planning stages, stymied by the lack of firm buyers, and unpredictable regulations.

“There is a paradox of everyone wanting green hydrogen and energy transition, but nobody wanting to pay for it,” said Luc Koechlin, CEO of EDF Middle East. “You cannot unlock the green hydrogen industry without subsidies or regulation.”

The slowdown, he noted, is visible even in markets once hailed as pioneers. “We’ve seen cancellations like the Clean Hydrogen Power Generation tender in South Korea, and delays in global frameworks,” he added.

The Gulf advantage: low-cost power and policy clarity

Still, the Gulf nations see opportunity amid the global lull. Blessed with abundant solar and wind resources, vast tracts of land, and investor-friendly policies, the countries in the region are positioning themselves as the world’s green hydrogen hub.

“In the case of green hydrogen, power is the main enabler,” said Hesham Tashkandi, President in KSA at ACWA Power. “If I take a competitive advantage perspective, the cost of renewable power in Saudi Arabia and the region has been declining sharply. At 1.3 cents per kilowatt-hour, it’s a clear advantage.”

Saudi Arabia’s flagship project, Neom Green Hydrogen, requires 4.2 gigawatts of renewable power to produce 600 tonnes of hydrogen per day, which makes it one of the world’s largest such ventures. “Add to that our geographic position and experience in mega-project execution,” Tashkandi continued, “The region is uniquely placed to serve global markets efficiently.”

Oman’s evolution from ambition to agility

Neighbouring Oman has taken a pragmatic turn. Having launched one of the earliest national hydrogen strategies three years ago, it has since refined its approach to focus on flexibility and mid-sized projects.

“The market is not as it was expected,” admitted Eng. Abdulaziz Al Shidhani, Managing Director of Hydrom. “So we redesigned our third round of projects to target smaller, medium investors, 50,000 tonnes instead of 150,000 per phase, allowing developers to scale with demand.”

He highlighted a key policy reform wherein a single and automatic permit system reduced bureaucratic approvals from up to 36 entities, to just 7. “Once awarded, investors get immediate access to the land,” he said. “We’re doing our best on the supply side, not only to meet domestic demand, but also to help industrialised nations diversify their energy mix.”

Oman has already commissioned its first green hydrogen fuelling station, and signed a liquid hydrogen corridor linking Duqm to Amsterdam and Germany’s Duisport, targeting commercial operations by 2030.

Policy remains the missing link

For technology providers like Air Liquide, the problem isn’t capability, but economics. “We can produce hydrogen, grey, blue, or green,” said Nicolas Poirot, the company’s CEO for Africa, Middle East, and India. “But green only works when offtakers are ready to pay for its value.”

Poirot pointed to Europe’s 200-megawatt electrolyser projects with Siemens Energy as examples of how policy and subsidies create viable markets. “Here in the GCC, you have something just as important: long-term stability, and regulatory visibility,” he said. “That’s what allows investors like us to bring technology and scale.”

While electrolyser costs have dropped, they are still capital-intensive. “A single 200MW electrolyser can cost around €500 million,” he said. “That’s before the power generation component. You need confidence that buyers will commit.”

Cracking ammonia, and storing hydrogen

ACWA Power’s Tashkandi and Air Liquide’s Poirot both emphasised the importance of storage and conversion technologies to bridge cost barriers. Ammonia is emerging as a practical carrier for hydrogen exports, and companies are now scaling up cracking facilities to reconvert ammonia into hydrogen at destination markets.

“We are already cracking ammonia in Belgium on an industrial scale,” Poirot revealed. “That allows us to import green ammonia, potentially from projects in the Middle East, and decarbonise industrial assets in Europe.”

Storage, too, offers new opportunities. “The region’s history in hydrocarbons means we have depleted oil fields ideal for hydrogen storage,” said Tashkandi. “This legacy infrastructure can accelerate the transition.”

Financing the transition

As capital is plentiful, the panel agreed that financing isn’t the problem, in fact, it is the lack of market demand. “There is no shortage of capital in the region,” said EDF’s Koechlin. “The problem is when nobody wants to pay, how do you develop a project?”

To address that, Oman is creating domestic offtake mandates, requiring new gas supply agreements for direct-reduced iron plants to include a hydrogen share starting at 10% by 2030. The goal is to cultivate internal demand, and free up natural gas for export.

Despite frustrations, none of the panelists suggested giving up on hydrogen. “We need to be humble, flexible, and pragmatic,” said Poirot. “The early hype may have faded, but I'm convinced that by learning from different countries' experience, you can bring the best of everything together.”

Hydrom’s Al Shidhani agreed, “It’s not a slowdown; it’s an agile approach. We’re aligning our pace with real demand, rather than chasing announcements.”

The panel ended with a note highlighting the Gulf’s unique advantages, which is a combination of low-cost energy, policy stability, and long-term vision.