The Commitment
In 2021, Oman announced a national commitment to achieve net-zero greenhouse gas emissions by 2050 — making it one of the first Gulf states to set a net-zero target. The commitment was reinforced in Oman’s updated Nationally Determined Contribution (NDC) submitted to the UNFCCC under the Paris Agreement, which includes interim targets for renewable energy and emissions intensity reduction.
The 2050 target is significant precisely because Oman is a substantial oil and gas producer. Petroleum accounts for approximately 39% of GDP (2017 baseline), 60%+ of government revenues, and is the foundation of Oman’s fiscal position. Committing to net-zero while maintaining oil production through the transition period creates inherent tensions that the policy architecture must navigate.
Renewable Energy Transition
Oman’s Vision 2040 environment priority includes a target of 30% renewable energy share of the electricity generation mix by 2030, rising to higher levels through 2040. Current renewable capacity is substantially below this — Oman’s grid remains dominated by gas-fired generation.
Solar: Oman’s geographic position — high solar irradiance across most of the country, with global horizontal irradiance levels comparable to the world’s best solar resource areas — makes utility-scale solar the primary renewable opportunity. The Manah Solar I and II projects (each 500 MW) under ACWA Power represent the largest current utility solar deployments. Additional projects are in procurement under OPWP (Oman Power and Water Procurement Company).
Wind: While Oman’s wind resources are less consistently strong than its solar resource, coastal and highland sites offer viable wind development. The Dhofar Wind Farm (50 MW, operational) demonstrated technical viability; larger developments are in planning.
Storage: The intermittency of solar and wind generation requires battery storage or other flexibility solutions for high-penetration renewable integration. Pumped hydro and utility-scale battery projects are under evaluation.
Green Hydrogen as Export Strategy
Oman’s most ambitious decarbonisation-linked economic strategy is green hydrogen — producing hydrogen through electrolysis powered by renewable electricity, potentially for export as hydrogen gas, ammonia, or other carrier molecules.
The scale of Oman’s green hydrogen ambitions is remarkable:
- ACME Group (India): 2.5 GW electrolyser capacity, targeting green ammonia export. MoU signed, development ongoing.
- Hyport Duqm (consortium including OQ, Shell, Uniper, Engie): Integrated green hydrogen and ammonia project at the Duqm SEZ, targeting European export markets.
- Additional projects: Multiple additional MoUs signed through 2024/2025, representing a total pipeline of $30+ billion in potential investment.
The strategic logic is clear: Oman has exceptional renewable resource (solar, some wind), deep-water port access (Duqm), available land in non-populated areas, and an existing hydrocarbons export infrastructure mindset. Green hydrogen, if commercially viable, offers a potential revenue stream to partially replace declining oil revenues over the transition period.
Commercial viability risk: The economics of green hydrogen remain challenging. Green hydrogen currently costs approximately 3-5x the price of fossil-fuel-derived hydrogen. Cost reduction depends on scale, electrolyser technology improvement, and renewable electricity cost reduction. The pathway to commercial export competitiveness requires all three to progress simultaneously.
Industrial Decarbonisation
Beyond the electricity sector and hydrogen export, Oman’s decarbonisation challenge includes its industrial base:
OQ Group (formerly Oman Oil Company + Orpic): As Oman’s integrated energy company, OQ’s own Scope 1 and 2 emissions represent a significant share of national emissions. OQ has committed to net-zero by 2050, with interim targets for flaring reduction and carbon intensity improvement.
PDO (Petroleum Development Oman): As Oman’s largest oil producer, PDO’s operational emissions are significant. PDO has invested in methane monitoring, flare reduction, and renewable-powered operations at remote sites.
Aluminium smelting and steel: The Sohar Industrial Port hosts energy-intensive heavy industries. Decarbonising these facilities requires either renewable power availability at competitive prices or carbon capture solutions — both of which require significant policy and infrastructure investment.
Policy Architecture
Oman’s climate policy is coordinated through:
- Ministry of Energy and Minerals: Responsible for energy transition and renewable energy target implementation
- Oman Climate Change Committee: Cross-ministerial coordination for NDC implementation
- Authority for Public Services Regulation (APSR): Regulates the electricity sector, including renewable energy procurement
- OPWP (Oman Power and Water Procurement Company): Procures generation capacity, including renewable projects
Credibility Assessment
Oman’s net-zero commitment faces credibility questions that are common to petro-states making climate commitments:
The oil production tension: Oman continues to invest in oil production maintenance and expansion (EOR, new field development) while committing to net-zero. This is not necessarily contradictory — the commitment is to Oman’s own emissions, not to global oil supply — but it creates a perception challenge.
Policy implementation gap: The 30% renewable target by 2030 requires a significant acceleration from current renewable deployment rates. The regulatory and financing mechanisms for this acceleration are being developed but not yet fully in place.
Green hydrogen commercial uncertainty: The $30bn green hydrogen pipeline is largely MoU-stage commitments. Converting these into final investment decisions requires global hydrogen market development that is not yet assured.
Despite these challenges, Oman’s commitment is genuine in its ambition and more detailed in its implementation architecture than many comparable economy commitments. The green hydrogen strategy in particular represents a credible attempt to align economic transformation with energy transition.