Middle East Energy Transition - Sectors and Companies Driving Development - 2026

The Middle East continues to be dominated by traditional fossil fuels. However, countries are shifting their energy strategies away from oil-fired generation towards a power mix dominated by gas and renewables. Whilst the region has abundant natural gas reserves, balancing the dynamic between exports and domestic supply will be crucial for its energy security.

Despite the region's continued reliance on thermal power, renewable technologies are rapidly scaling due to climate ambitions and energy and economic diversification strategies.

As countries in the region expand their renewable energy capacities, the deployment of energy storage technologies will be crucial to mitigate the intermittency of renewables and ensure grid stability. However, energy storage currently remains an emerging technology with capacity concentrated in Saudi Arabia, the UAE, and Israel.

Electric vehicle penetration in the Middle East saw a sharp increase in penetration in 2024. Despite previous low adoption rates, driven by insufficient charging infrastructure and price disparity with ICE vehicles, government targets and regulations are supporting development.

Given the role of the Middle East in the aviation industry, significant investment is being made to position the region as a hub for SAF production.

Due to its extensive fossil fuel production, CCUS has the potential to play a key role in the decarbonization of the Middle East. The region's CCUS capacity is set to grow at a CAGR of 32% between 2026 and 2030.

Low-carbon hydrogen plays a key role in many Middle Eastern nations' economic diversification strategies. Many countries are looking to leverage the region's existing oil and gas infrastructure and expertise, and its vast natural gas and renewable resources, to establish themselves as key global export hubs for low-carbon hydrogen.

Key Highlights

• By 2035, renewables are set to reach a 21% share of the power mix, an increase from its 6% share in 2025. Solar PV, alone, is set to account for 18% of the power mix driven by developers such as Acwa Power.
• Given the role of the Middle East in the aviation industry, significant investment is being made to position the region as a hub for SAF production.
• At present, all 10 of its active and upcoming projects are focusing their capacity on SAFs, with production forecasted to reach 516mmgy by 2030.
• The region's CCUS capacity is set to grow at a CAGR of 32% between 2026 and 2030, with enhanced oil recovery a key driver of this growth in the near term due to its revenue-generating potential for the oil industry.
• From 2026 to 2030, the Middle East's low-carbon hydrogen capacity is expected to grow at a CAGR of 48%, across ~84 projects.

Scope

• Middle Eastern leaders in energy transition technologies, Country net-zero targets, renewable power capacity and generation, decommissioning of thermal power, natural gas reserves, major players in renewable energy, energy storage capacity, major players in energy storage, electric vehicle outlook, renewable refinery outlook, CCUS outlook, largest upcoming carbon capture projects, hydrogen policies, low-carbon hydrogen outlook, regional breakdown of hydrogen capacity, breakdown of hydrogen by end-product, largest upcoming low-carbon hydrogen projects

Reasons to Buy

• Assess the current regional emissions, thermal and renewable capacity, and generation share, and identify which countries are driving the energy transition in the Middle East
• Identify market trends within the industry, including expected 2030 capacities for a range of technologies
• Identify who the leading countries and regional players are in renewable energy capacity and energy transition technologies, such as hydrogen and CCUS
• Understand the legislative framework laid out by the region's governments aimed at accelerating the region's decarbonization and energy transition