With its abundant sunshine and wind, the Middle East and North Africa (MENA) is a growing hub for renewable power generation. Such power is essential for cleanly producing hydrogen, itself needed to bring down emissions from industry and transport.
The region has seen a wave of clean hydrogen projects announced in recent years.
With Europe as the main target market, and Chinese equipment and engineering helping to build out supply, MENA is becoming a bridge connecting the world’s two major green hydrogen markets.
Yet the market remains unsettled. A shortage of committed buyers, together with Europe’s mixed policy signals, is testing the industry and MENA’s strength as a hydrogen bridge.
How attractive is MENA for green hydrogen?
Being one of the world’s sunniest regions, MENA is particularly suitable for producing renewable power and green hydrogen.
Hydrogen has the potential to replace fossil fuels in transport and heavy industries such as steel. It’s also commonly used to produce ammonia, a feedstock for fertiliser. “Green” hydrogen, produced using renewable energy, gives rise to zero or close to zero carbon emissions.
But currently hydrogen is dominated by fossil fuels with the resulting emissions uncaptured. Less than 1% of production is classified as “low-emissions” by the International Energy Agency (IEA) in its Global Hydrogen Review released in June.
The IEA has predicted that renewable capacity in the MENA region will triple between 2023 and 2030, from 53 gigawatts (GW) to almost 150 GW.
Thanks to this rich renewable resource, “some gigawatt-scale projects” are aiming to produce green hydrogen for below USD 3 per kg, said Youssef Naim, a regional energy expert from classification and energy consultancy DNV. “This would be “one of the lowest levelised costs of hydrogen in the world,” he added.
Levelised cost of energy means the full life-cycle costs of a technology per unit of electricity it generates.
For comparison, the equivalent cost in the EU was almost USD 9 per kg in 2023, according to Hydrogen Europe. In China, the cost was between USD 3.1 and USD 6.8 per kg in 2025.
Naim told Dialogue Earth that MENA also has the advantage of being on the doorstep of Europe, its biggest customer. Competing exporters, “such as the rest of Africa, Australia or Latin America, add far more shipping distance to every cargo”, he says.
According to the IEA, converting hydrogen so it can be transported incurs energy losses of 40-70%.
Many of MENA’s “strongest projects” sit next to export infrastructures, as well as downstream industries such as ammonia plants, refineries and desalination capacity, explains Naim, further shortening transport distance and reducing cost.
The Middle East also has pipelines planned for sending hydrogen straight to Europe. The SoutH2 Corridor aims to connect North Africa, Italy, Austria and Germany. Another liquid hydrogen corridor connecting Oman, the Netherlands and Germany is scheduled for 2030.
“The world’s largest market for green hydrogen will probably be in Europe, and the only way to reach that market is through these MENA countries,” said Mathias Larsen, senior policy fellow at the London School of Economics’ Grantham Research Institute.
Europe, with its limited natural resources, will likely need to import green hydrogen or related products to service its demand, he added.
EU predictions puts the continent’s consumption at up to 68 million tonnes by 2050 compared to 7.3 million tonnes in 2023.
Given Europe’s desire to reduce dependence on China, MENA is the most logical production hub.
Isadora Wang, head of China at think-tank Transition Asia, agrees. She said the fact that no Western nation has proposed “a partnership with China and buying green hydrogen,” due to fears of overreliance on the country, makes MENA a “good, natural option” for Europe.
How tightly does MENA connect Europe and China?
While Europe remains MENA’s preferred market, China has been actively involved in early-stage construction across the region.
In the first half of 2026, the Middle East topped the list of Chinese construction engagement with USD 36.5 billion, according to the China Belt and Road Initiative Investment Report 2026 H1. The projects spanned a wide range of sectors, including transport infrastructure, energy storage and energy utilities.
China’s state-owned company Sinopec has invested in Saudi Arabia’s Yanbu project, which aims to produce 400,000 tonnes of green hydrogen per year. Other Chinese investments include a project in Morocco that aiming to make 1.4 million tonnes of green ammonia each year, and an Oman project for 300 tonnes of green ammonia a day.
Chinese companies “know [the] value of selling green hydrogen to Europe is immensely large”, so they view participating in MENA projects as a gateway to Europe, said Larsen.
More broadly, China’s involvement also fits its energy “big picture” of promoting green energy and reducing reliance on fossil fuels, said Wang.
China’s current plan for hydrogen – The Medium- and Long-Term Plan for the Development of the Hydrogen Energy Industry (2021-2035) – lists green hydrogen as “the new frontier”, including exporting them globally. Gaining experience in MENA helps China to build a global profile, she added.
China produced 36.5 million tonnes of hydrogen in 2024, accounting for more than a third of global output. In 2023, its consumption was about 40 million tonnes.
While there is a supply gap, Larsen thinks MENA hydrogen products entering China “would not be a direction”, largely because China already has a mature domestic supply chain. Naim also expected China’s demand to be “met largely from its own renewables and electrolyser base”.
In fact, a joint report backed by German and Chinese governments warned that China’s rapid hydrogen supply growth raises the risk of “overcapacity”.
“The more realistic reading is that the China-MENA relationship in hydrogen runs through technology and engineering flowing into the region,” Naim told Dialogue Earth.
In some sense, MENA is already a strong “bridge” connecting Europe’s buyers and China’s tech suppliers, argues Larsen.
Between supply and demand
In 2022, the Middle East had the capacity to produce over 4 million metric tonnes of hydrogen, and is forecast to produce 18 million metric tonnes by 2030, according to S&P Global Commodity Insights. However, the prediction for Middle East demand and export growth is much smaller.
In fact, DNV’s data shows that only about one-third of the more than 1,500 hydrogen projects announced worldwide reached final investment decision. “The single most common reason is the difficulty of securing reliable offtake”, said Naim, referring to agreements with purchasers.
“The region’s offtake problem is sharper than the global average,” he added, pointing out its small domestic demand and high reliance on exports.
The EU, MENA’s largest buyer, has sent mixed signals over recent years.
In plans released in 2020 and 2022, the European Commission set out the aim of producing 10 million tonnes of renewable hydrogen per year in the EU by 2030 and importing a further 10 million tonnes. In 2023, the commission adopted detailed rules and binding targets for “renewable hydrogen” – largely green hydrogen.
But the EU later added a separate framework for “low-carbon hydrogen and fuels”, complementing the existing rules for renewable hydrogen. This opens a door to hydrogen produced from non-renewable energy sources, such as gas, as long as it can “reach a threshold of 70% greenhouse gas emission savings compared to the use of unabated fossil fuels”.
Larsen said: “I think they are concerned that the high standards for green hydrogen will increase the cost of production and will harm the [local] industries. European industries are already squeezed by China and others.”
But Naim said MENA is not taking “a single bet on Europe”. One of Saudi Arabia’s biggest hydrogen projects, NEOM, for example, has faced challenges in selling the “600 tonnes per day of clean hydrogen” it’s slated to produce from 2027. In July, it made an agreement with global fertiliser producer Yara to market approximately 1.2 million tonnes of green ammonia per year from 2027.
Wang called NEOM’s global ammonia approach – “transporting the form that actually will be used at the destination” – “the easiest” solution for selling hydrogen.
Wang thinks there is actually a large market potential for MENA’s green hydrogen at home, because “right now, North Africa needs to import fertiliser to help secure food supply”. Projects like NEOM can use locally produced hydrogen as feedstock to produce ammonia fertlisers.
If green hydrogen can be largely turned into green ammonia with government subsidies, and when domestic fertiliser becomes price-competitive with imports, a major local market would be created. It will also “further strengthen their food security”, she added.
NEOM chose not to comment on its plans for selling green hydrogen and ammonia.
