The Middle East and North Africa (MENA) is emerging as a potential link between Europe’s growing appetite for green hydrogen and China’s expanding role in renewable energy technology and engineering.
Blessed with some of the world’s strongest solar and wind resources, the region has become a natural location for large-scale renewable power projects. That renewable electricity is also crucial for producing green hydrogen, which could help industries and transport sectors reduce their dependence on fossil fuels.
Over the past several years, governments and companies across MENA have announced a wave of clean hydrogen projects, many designed with European customers in mind. At the same time, Chinese companies are increasingly supplying equipment, technology and engineering expertise needed to develop those projects.
The result is an emerging three-way relationship: MENA provides renewable resources and production capacity, China supplies technology and engineering, while Europe represents a major potential market.
But the business case is far from settled. Developers are struggling to secure firm buyers, while changing European policies are creating uncertainty over future demand. Those challenges could determine whether MENA becomes a major global hydrogen hub or a collection of ambitious projects that fail to reach commercial scale.
Why MENA Is Attractive for Green Hydrogen
MENA’s biggest advantage is its renewable energy potential.
The region receives abundant sunlight throughout much of the year and also has areas with strong wind resources. This makes it particularly well suited to generating the renewable electricity required to produce green hydrogen through electrolysis.
Hydrogen is increasingly viewed as a potential replacement for fossil fuels in difficult-to-decarbonise sectors, including heavy industry, steelmaking and some forms of transport. It is also widely used to produce ammonia, an essential ingredient in fertiliser manufacturing.
Green hydrogen is produced using renewable electricity and water, avoiding the carbon emissions associated with conventional hydrogen production.
However, most hydrogen production today still depends on fossil fuels. According to the International Energy Agency (IEA), less than 1% of global hydrogen production was classified as low-emissions in its Global Hydrogen Review released in June.
The renewable energy base needed to change that equation is expanding rapidly in MENA. The IEA expects renewable power capacity in the region to almost triple between 2023 and 2030, rising from around 53 gigawatts (GW) to nearly 150 GW.
That could give MENA some of the lowest-cost green hydrogen production opportunities in the world.
Youssef Naim, a regional energy expert at DNV, said some gigawatt-scale projects in the region are targeting production costs below US$3 per kilogram.
Such costs would put MENA among the most competitive green hydrogen production regions globally.
By comparison, the equivalent cost in the European Union was close to US$9 per kilogram in 2023, according to Hydrogen Europe. In China, green hydrogen costs were estimated at between US$3.1 and US$6.8 per kilogram in 2025.
Geography Gives MENA Another Advantage
Cost is not MENA’s only advantage.
The region is also geographically close to Europe, which is expected to become one of the world’s largest markets for green hydrogen.
Exporting hydrogen over long distances can be expensive and energy-intensive. The IEA estimates that converting hydrogen into forms suitable for transportation can result in energy losses of between 40% and 70%.
MENA’s proximity to Europe therefore gives its producers an important logistical advantage over competitors in regions such as Australia, Latin America and parts of Africa.
Many of the region’s major hydrogen projects are also being developed close to existing export infrastructure and industrial facilities.
According to Naim, projects located near ammonia plants, refineries, desalination facilities and ports can reduce transportation requirements and lower overall costs.
Infrastructure plans could further strengthen MENA’s position.
The proposed SoutH2 Corridor, for example, is intended to connect North Africa with Italy, Austria and Germany, creating a potential route for hydrogen to reach European markets.
Another planned liquid hydrogen corridor is expected to connect Oman with the Netherlands and Germany, with operations targeted for around 2030.
“The world’s largest market for green hydrogen will probably be in Europe,” said Mathias Larsen, a senior policy fellow at the London School of Economics’ Grantham Research Institute. He argued that MENA countries could play an important role in supplying that market.
Europe has limited domestic renewable resources compared with its potential hydrogen demand, meaning imports are likely to become increasingly important.
EU projections indicate that European hydrogen consumption could reach as much as 68 million tonnes by 2050, compared with around 7.3 million tonnes in 2023.
China’s Growing Role in MENA’s Hydrogen Industry
While Europe is positioned as a major potential customer, China is increasingly becoming an important partner on the supply side.
Chinese companies are participating in the construction and development of energy projects across MENA, including hydrogen and green ammonia ventures.
During the first half of 2026, the Middle East ranked as the leading destination for Chinese construction engagement, attracting approximately US$36.5 billion in projects, according to the China Belt and Road Initiative Investment Report 2026 H1.
The projects cover multiple sectors, including transport infrastructure, energy storage and energy utilities.
Chinese companies have also become involved directly in MENA’s hydrogen economy.
State-owned Sinopec, for example, has invested in Saudi Arabia’s Yanbu project, which aims to produce around 400,000 tonnes of green hydrogen annually.
Other projects include a planned Moroccan development targeting approximately 1.4 million tonnes of green ammonia production each year and an Omani project designed to produce around 300 tonnes of green ammonia per day.
For China, involvement in these projects offers more than an opportunity to sell equipment.
Larsen said Chinese companies recognise the significant value of the European green hydrogen market and see participation in MENA as a potential route into that market.
Isadora Wang, head of China at think-tank Transition Asia, said China’s involvement also fits into Beijing’s broader strategy of expanding renewable energy and reducing dependence on fossil fuels.
China’s Medium- and Long-Term Plan for the Development of the Hydrogen Energy Industry, covering 2021 to 2035, identifies green hydrogen as an important emerging area and includes ambitions for international development and exports.
Participation in overseas projects gives Chinese companies practical experience and strengthens their position in the global hydrogen industry, Wang said.
China already has a massive domestic hydrogen market. The country produced approximately 36.5 million tonnes of hydrogen in 2024, representing more than one-third of global output. Its hydrogen consumption reached roughly 40 million tonnes in 2023.
That makes direct exports of MENA-produced hydrogen to China less likely.
Larsen said the flow of hydrogen from MENA to China would probably not become a major trade route because China already has an established domestic supply chain.
Naim similarly expects Chinese demand to be met largely through China’s own renewable energy and electrolyser capacity.
Instead, the stronger relationship is likely to involve Chinese technology and engineering moving into MENA.
A joint report supported by the German and Chinese governments has even warned that China’s rapid expansion of hydrogen production could create an overcapacity problem.
“The more realistic reading is that the China-MENA relationship in hydrogen runs through technology and engineering flowing into the region,” Naim said.
In that sense, MENA could become a bridge between Chinese technology suppliers and European hydrogen buyers.
The Biggest Problem: Finding Buyers
Despite its strong production potential, MENA faces a major obstacle: demand.
The region has announced ambitious production targets, but many projects remain dependent on securing long-term purchase agreements.
S&P Global Commodity Insights estimates that the Middle East had the capacity to produce more than 4 million metric tonnes of hydrogen in 2022. Production is forecast to rise to around 18 million metric tonnes by 2030.
However, expected demand and export growth remain significantly smaller than the potential supply.
Globally, many hydrogen projects are also struggling to move beyond the announcement stage.
According to DNV data, only around one-third of more than 1,500 hydrogen projects announced worldwide have reached final investment decision.
The most common reason, Naim said, is the difficulty of securing reliable offtake agreements — contracts committing buyers to purchase the hydrogen or hydrogen-based products.
The problem is particularly serious in MENA because domestic hydrogen demand remains relatively limited and many projects depend heavily on exports.
That leaves developers exposed to international policy changes, transportation costs and uncertain demand from overseas buyers.
Europe’s Changing Hydrogen Policy Adds Uncertainty
Europe remains the most important potential market, but its policy direction has become increasingly complicated.
The European Commission announced ambitions in 2020 and 2022 to produce 10 million tonnes of renewable hydrogen annually within the EU by 2030 while importing another 10 million tonnes.
In 2023, the EU introduced detailed rules and binding targets for renewable hydrogen, establishing a framework largely focused on green hydrogen.
However, Europe subsequently introduced a separate framework for low-carbon hydrogen and fuels.
The distinction matters because low-carbon hydrogen can include hydrogen produced using non-renewable energy sources such as natural gas, provided it achieves a required greenhouse-gas emissions reduction compared with unabated fossil fuels.
The shift has created uncertainty for green hydrogen developers.
Larsen suggested that European policymakers may be concerned that strict standards for green hydrogen could push production costs higher and put European industries at a disadvantage against international competitors, particularly China.
For MENA producers, this raises questions about how strong European demand will ultimately be and what price European buyers will be willing to pay.
MENA Is Looking Beyond Europe
Despite Europe’s importance, MENA is not necessarily relying entirely on European buyers.
Saudi Arabia’s NEOM green hydrogen project illustrates the challenge.
The project is expected to produce around 600 tonnes of clean hydrogen per day from 2027, but securing a market for that output has proven challenging.
In July, the project reached an agreement with global fertiliser producer Yara to market approximately 1.2 million tonnes of green ammonia annually from 2027.
The move highlights a broader strategy emerging across the region: instead of shipping pure hydrogen, producers can convert it into ammonia before transportation.
Ammonia is easier to transport and already has established global markets, particularly in fertiliser production.
Wang described this approach as one of the easiest ways to commercialise hydrogen because it transports the product in a form that can be directly used by customers.
Could Domestic Fertiliser Demand Become the Answer?
There may also be a significant market for green hydrogen within MENA itself.
North African countries, in particular, rely on fertiliser imports to support agricultural production and food security.
Green hydrogen can be used as a feedstock to produce green ammonia, which can then be converted into fertiliser.
If governments provide sufficient support to make green ammonia competitive with imported fertiliser, domestic demand could provide an important additional market for MENA hydrogen projects.
Such an approach could offer two benefits: reducing dependence on imported fertiliser while creating a reliable local market for renewable hydrogen.
It would also reduce the industry’s dependence on uncertain international buyers.
A Hydrogen Bridge Still Under Construction
MENA has many of the ingredients needed to become a major green hydrogen hub: abundant renewable energy, relatively low potential production costs, proximity to Europe, existing industrial infrastructure and growing Chinese investment in technology and engineering.
China, meanwhile, has the manufacturing capacity, electrolyser expertise and engineering capabilities needed to help build large-scale projects.
Europe provides the strongest potential source of demand.
But the connection between these three markets is not guaranteed.
The industry’s biggest challenge is no longer simply producing cheap green hydrogen. Developers must prove that someone is willing to buy it, at a price that makes billion-dollar projects financially viable.
For MENA, the emerging model may therefore be broader than simply producing hydrogen for Europe. Green ammonia, domestic fertiliser production and other hydrogen-based products could provide additional routes to market.
If those markets develop alongside European demand, MENA could become a crucial bridge between China’s clean-energy technology industry and Europe’s decarbonisation ambitions.
