MENA Could Supply Europe with China-built Green Hydrogen

Estimated reading time: 6 minutes · Last updated: 28 August 2026

MENA’s green hydrogen sector has the supply fundamentals—abundant sun and wind and falling project costs—that could allow the region to export to Europe at competitive prices. Several gigawatt-scale projects in the region are targeting production costs below US$3 per kg, supported by the area’s renewable resource potential and by Chinese engineering and equipment on site. Together these factors make MENA a practical bridge between China’s builders and Europe’s buyers, but securing long-term buyers remains the industry’s single biggest obstacle. Figures and interviews published by Dialogue Earth inform this account.

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.

Mathias Larsen, senior policy fellow, London School of Economics' Grantham Research Institute

Why MENA can make cheap green hydrogen

MENA’s climate and existing energy corridors give it a structural edge for low-cost renewable power. The International Energy Agency projects regional renewable capacity will increase from 53 gigawatts in 2023 to almost 150 gigawatts by 2030, raising the region’s potential electricity available for electrolysers. Youssef Naim of DNV points to project designs that, at gigawatt scale, target production costs under US$3 per kg of hydrogen.

Lower electricity costs translate directly to lower electrolyser running costs. Proximity to European demand centres and to downstream industrial clusters — ammonia plants, refineries and desalination facilities — shortens logistics and reduces the penalties that come with converting and shipping hydrogen. Still, transporting hydrogen adds energy losses: the IEA estimates conversion and transport of derivatives can incur 40–70% energy losses, which shapes whether exporters ship molecules directly or convert them first.

China’s builders and capital are central to projects

Chinese firms are active across the MENA buildout as suppliers, EPC contractors and investors. A China Belt and Road Initiative report shows Chinese construction engagement in the Middle East reached US$36.5 billion in the first half of 2026. State-owned and private Chinese firms are supplying electrolysers, balance-of-plant and engineering services that accelerate project delivery.

Sinopec’s investment in the Yanbu hub in Saudi Arabia is among the headline examples: that project aims to produce 400,000 tonnes of green hydrogen per year, according to project notices. China itself produced 36.5 million tonnes of hydrogen in 2024 and consumed about 40 million tonnes in 2023, which helps explain why Chinese firms see value in gaining experience overseas even if China’s domestic supply remains large.

Demand-side gaps: buyers, policy and offtake risk

Supply momentum in MENA meets a fragile demand picture. DNV’s dataset shows only about one-third of more than 1,500 announced hydrogen projects worldwide reached final investment decision; the most common obstacle is securing reliable offtake contracts. The region’s own domestic markets are relatively small today, increasing reliance on exports.

European policy has both helped and hindered. Between 2020 and 2022 the EU set targets to produce 10 million tonnes of renewable hydrogen domestically by 2030 and to import a further 10 million tonnes, but the EU subsequently introduced a distinct framework for low-carbon hydrogen that permits products meeting a 70% greenhouse-gas saving threshold. That divergence in standards complicates long-term purchase commitments and raises buyer uncertainty for MENA exporters.

Commercial routes: molecules, ammonia or pipelines

Export economics will decide whether MENA ships hydrogen itself, converts it to ammonia or uses pipelines. Converting hydrogen into ammonia is already the commercial default for several large projects because ammonia fits existing shipping and fertiliser markets. NEOM, for example, has faced difficulty placing 600 tonnes per day of hydrogen planned from 2027 and instead agreed with Yara on marketing roughly 1.2 million tonnes of green ammonia per year from 2027.

Planned infrastructure includes both pipelines and liquid hydrogen routes: the South2 Corridor aims to link North Africa with Italy, Austria and Germany; and a liquid hydrogen route intended to run from Oman through the Netherlands to Germany is expected to begin operating in 2030. Those corridors shorten shipping distances to Europe and enhance the locational advantage of MENA, but they require coordinated permitting and long lead times before significant volumes can flow.

How the case for and against MENA exports stacks up

The bottom line

MENA has the physical and industrial assets to become a major green hydrogen exporter to Europe: abundant renewables, short shipping distances and active Chinese engineering input lower the cost and time to market. Yet the industry’s progress depends on buyers and policy certainty. Securing firm offtake contracts, finalising export corridors and resolving what counts as acceptable low-carbon or renewable hydrogen in Europe will determine which announced projects reach full scale. For now, builders and host governments press ahead, but the sector’s next phase will hinge on commercial commitments rather than resource potential alone.

What to watch

• Watch for NEOM to begin commercial output or to finalise additional offtake contracts in 2027; the project’s 600 tonnes/day target is slated to start in 2027.
• Watch for the launch or first commercial shipments via the Oman–Netherlands–Germany liquid hydrogen corridor, scheduled for 2030.
• Watch for milestones on the South2 Corridor between North Africa and Italy/Austria/Germany; no date has been set for the corridor’s next regulatory or permitting milestone.