The Middle East’s energy transition is advancing at an uneven pace, with ambitious 2050 and 2060 net zero targets increasingly diverging from current investment and policy trends, according to the latest Energy Transition Outlook from Wood Mackenzie.
While the region is rapidly expanding renewable energy and is on track to become a global solar manufacturing hub, achieving net zero emissions by 2060 would require cumulative investments of approximately $5.3 trillion. Under Wood Mackenzie’s base case scenario, the region is projected to align with a 2.6°C warming pathway, missing the 1.5°C trajectory that many countries have pledged to support.
Jom Madan, principal analyst at Wood Mackenzie, said the region’s transition reflects tension between climate goals and economic dependence on hydrocarbons. Oil and gas accounted for 40 percent of global energy exports from the region in 2025, underlining their continued strategic importance.
Diverging Strategies Across Gulf Producers
The report highlights significant variation in national transition strategies, largely shaped by hydrocarbon reserves and economic exposure.
Oman is pursuing one of the most aggressive decarbonisation paths in the region. With around 20 years of oil and gas reserves at current production levels, Oman is expected to exceed its 30 percent renewables target by 2030 and reach 89 percent renewable power by 2050. Higher production costs and geological challenges are pushing the country to diversify through clean energy and industrial development.
Qatar, by contrast, holds more than 2,000 trillion cubic feet of gas reserves, equivalent to over 100 years of supply. It is expanding LNG export capacity from 77 million tonnes per annum to 142 million tonnes by 2032, reinforcing its long-term gas strategy amid expectations of resilient global demand.
Saudi Arabia is balancing renewable deployment with continued upstream oil expansion. The kingdom has set a goal of 50 percent clean power by 2030, though Wood Mackenzie’s base case projects closer to 20 percent.
The United Arab Emirates is simultaneously scaling fossil fuel production and clean energy infrastructure. It is expected to exceed its 30 percent clean power target by 2030 but may fall short of its 47 percent emissions reduction goal by 2035.
According to Madan, countries with large, low-cost reserves face less immediate pressure to accelerate decarbonisation, while those with more limited resources are treating the transition as an economic necessity.
Solar and Storage Drive Power Sector Transformation
Electricity generation remains the most visible area of progress. Installed solar capacity is projected to rise from 30 GW in 2025 to 97 GW by 2030, reaching 580 GW by 2050.
The surge in domestic deployment is attracting manufacturing investment, with regional solar production capacity expected to reach 44 GW by 2028. This could position the Middle East as a major solar supply chain hub, competing with established centers in Southeast Asia. Drivers include tariff advantages in export markets, local content requirements and access to low-cost energy.
Battery storage is increasingly integrated with renewables to manage peak loads, especially as cooling and desalination demand grows. Solar and wind are projected to meet most incremental electricity demand, increasing their share of regional power supply from 14 percent in 2025 to around 67 percent by 2050.
Oil and Gas Investment Remains Strong
Despite climate pledges, oil and gas investment in the region is rising. National oil companies are expanding upstream capacity and LNG infrastructure, aiming to maintain or increase global market share through 2050.
Natural gas is positioned both as a transition fuel and as feedstock for petrochemicals, reflecting confidence that hydrocarbons will remain economically viable even as clean energy expands.
Power Demand to Double by 2060
Regional electricity demand is expected to increase from about 1,450 TWh in 2025 to 1,650 TWh by 2030 and nearly 2,400 TWh by 2060. Growth drivers include rising incomes, population expansion, extreme heat requiring more cooling, desalination needs, industrial development and data center expansion.
Gas-fired generation will continue to play a key balancing role, providing flexible capacity to support variable renewable output.
Wood Mackenzie concludes that while the Middle East is making tangible progress in solar deployment and manufacturing, deeper economy-wide decarbonisation will depend on stronger policy implementation, technological innovation in hard-to-abate sectors and sustained global demand for low-carbon products.
BABURAJAN KIZHAKEDATH