The Gulf Cooperation Council (GCC) countries, such as Saudi Arabia, the UAE, Qatar, and Oman, have historically relied on exporting oil and liquefied natural gas (LNG). However, with growing concerns over climate change and diminishing hydrocarbon reserves, a shift toward clean hydrogen is underway. This new direction could help secure both economic resilience and global climate goals.
Hydrogen, especially when produced using cleaner methods, is poised to play a central role in decarbonising energy-intensive sectors like steel and cement, while supporting the transition of transportation and household energy use.
What Is Clean Hydrogen and Why Does Its Colour Matter?
Hydrogen is often classified by color labels based on how it is produced:
The climate impact of hydrogen depends entirely on how it’s produced.
Grey hydrogen is made via steam methane reforming (SMR), where methane (CH₄) reacts with steam to produce hydrogen (H₂) and carbon dioxide (CO₂): CH₄ + H₂O → CO + 3H₂, followed by CO + H₂O → CO₂ + H₂. Without capturing the resulting CO₂, this process emits significant greenhouse gases. Blue hydrogen uses the same reaction but pairs it with carbon capture and storage (CCS), which prevents much of the CO₂ from entering the atmosphere. Green hydrogen avoids fossil fuels entirely, splitting water molecules (H₂O) using renewable-powered electrolysis: 2H₂O → 2H₂ + O₂. This method emits only oxygen, making it nearly emission-free. Pink hydrogen follows the same electrolysis process, but instead of intermittent renewables, it relies on consistent nuclear energy. The UAE has set a target to produce around 7,500 tonnes of pink hydrogen annually by 2031.
Currently, grey hydrogen dominates global production, estimated at over 95%, but comes with heavy emissions. Blue hydrogen, which integrates carbon capture technologies, significantly lowers its footprint. Green hydrogen, however, is the cleanest option when powered by wind or solar electricity.
Despite its advantages, green hydrogen remains expensive, with production costs currently ranging between €2.80–7.50 per kg, depending on the region and renewable energy availability. Blue hydrogen costs around €1.85–3.20 per kg, and grey hydrogen remains the cheapest at approximately €0.80–2.30 per kg, though it carries the heaviest environmental cost. However, these figures are expected to change significantly. As electrolyser technologies improve and renewable electricity costs decline, the cost of green hydrogen is projected to drop sharply, potentially approaching or even falling below €3.00/kg in favorable conditions by the early 2030s.
Electrolysers, key to green and pink hydrogen production, come primarily in two commercial forms: alkaline and proton exchange membrane (PEM). Alkaline electrolysers are mature and less expensive, while PEM units offer higher efficiency and quicker response times, making them suitable for dynamic renewable grids. Current efficiencies hover around 60–70%, but next-generation systems are expected to reach up to 86% by 2030, improving the economics of green and pink hydrogen.
Europe’s Preference and Policy Landscape
The European Union has established strict environmental criteria through the Renewable Energy Directive (RED III) and Hydrogen Strategy. Under its EU Climate Taxonomy, only hydrogen with lifecycle emissions below 3 kg CO₂e/kg H₂ qualifies as sustainable.
This has effectively created a preference for green hydrogen in Europe, where policymakers aim to support a carbon-neutral economy. However, high-performance blue hydrogen, produced with 90–95% CO₂ capture efficiency and tight methane leak controls (≤0.2%), can also meet the EU’s threshold.
From 2026, the Carbon Border Adjustment Mechanism (CBAM) will further complicate hydrogen exports. This policy will impose tariffs based on embedded carbon emissions, meaning exporters to Europe will need to rigorously prove the sustainability of their hydrogen.
GCC Strategy: Blue First, Green Later
GCC countries are largely prioritizing blue hydrogen as a transitional solution. Their abundant low-cost LNG and existing CCS infrastructure make blue hydrogen more financially and logistically feasible in the short term. For instance, the UAE’s hydrogen strategy, developed in partnership with the Fraunhofer Institute, includes the concept of “hydrogen oases.” These integrate CCS in salt caverns and depleted oil wells, situated near LNG terminals and heavy industries to minimize transport emissions.
The GCC also benefits from decades of experience with CCS in the petroleum industry. This includes conventional injection methods and newer research into carbon mineralisation, particularly in Oman’s Samail ophiolites, one of only two geologic formations globally suitable for this process, the other being in Chile.
Additionally, many of these countries already produce grey hydrogen for refining and fertiliser industries. Converting these facilities into blue hydrogen plants, by adding CCS, is a relatively straightforward upgrade.
Oman’s Green Hydrogen Ambitions
Oman stands out in the region for its early and aggressive investment in green hydrogen. The southern governorates of Dhofar and Al Wusta offer some of the highest solar and wind potential in the GCC, making renewable-powered hydrogen production attractive.
Backed by significant foreign investment, Oman has already signed agreements to export green hydrogen derivatives like ammonia to Europe. This success is attributed not only to natural resources but also to political will and alignment with EU standards.
Nevertheless, the country’s move toward green hydrogen is partly driven by necessity: Oman’s domestic LNG reserves are declining, making long-term reliance on fossil fuel-based hydrogen unsustainable.
Bridging the Gap: Technical and Diplomatic Needs
For the GCC to succeed in exporting clean hydrogen to Europe without being penalized by CBAM or other trade barriers, several key issues must be addressed:
Certification and Verification
– Hydrogen must be tracked from production to export using transparent Monitoring, Reporting, and Verification (MRV) systems.
– Lifecycle emissions assessments (LCA) must include methane leakage rates, carbon capture efficiency, and source of gas or electricity.
Mutual Recognition of Standards
– The EU allows bilateral recognition of hydrogen certification schemes under Article 11 of the Hydrogen Delegated Act.
– GCC countries could develop compatible certification systems through regional bodies like the Gulf Organization for Industrial Consulting (GOIC).
Digital Infrastructure
– Establish secure digital tracking (e.g., blockchain) to certify hydrogen batch origin, emission intensity, and CO₂ storage validity.
Policy Cooperation
– An EU–GCC technical task force could align MRV and LCA methodologies and fast-track compliance.
What’s at Stake
If GCC-produced blue hydrogen can meet or exceed the 3 kg CO₂e/kg H₂ threshold, it could compete effectively in the European market. In fact, with the right safeguards, some blue hydrogen projects have already reached emissions as low as 2 kg CO₂e/kg H₂.
But without formal recognition of GCC verification standards, exporters may face double certification costs, first locally, then again in Europe, undermining profitability.
The EU tends to avoid voluntary carbon offsets or optimistic accounting, instead requiring concrete data on actual emissions. As a result, the only viable path forward is alignment, diplomacy, and technical cooperation.
Final Thoughts
Both green and blue hydrogen will be essential to the world’s decarbonization journey. Europe is accelerating its clean energy transition and needs dependable, low-emission imports to meet climate targets. For the GCC, moving towards clean hydrogen offers a strategic pathway to sustain their role in global energy markets while preparing for a post-hydrocarbon future.
By cooperating on shared standards, digital infrastructure, and mutual certification, both regions can build a sustainable hydrogen partnership.
This isn’t just about meeting climate targets. It’s about securing energy futures, enabling fair trade, and making sure that whether hydrogen is green, blue, or pink, it contributes to a cleaner, more stable world.
