Decarbonization Doctrine Drives Determined Developments

The Gulf’s steelmakers operate entirely using Electric Arc Furnaces that primarily consume Direct Reduced Iron, which already positions them well below the global CO₂ emission average of 1.85 metric tons per ton of steel. Emirates Steel, for instance, reports emissions of just 0.67 metric tons per ton, largely because 86% of its electricity is sourced from renewables. “Energy strategy shapes emissions trajectory,” notes GMK Center analyst Igor Vorontsov, explaining why plants like Qatar Steel, which lack renewable inputs, emit almost twice as much CO₂ per ton. The GCC’s reliance on natural gas & local iron ore drives efficiency but still leaves space for deeper cuts, making renewables a sine qua non.

Renewable Renaissance Reshapes Regional Roadmaps

Saudi Arabia’s Vision 2030 earmarks $186.5 billion to lift renewables’ share to 50% by decade’s end, constructing 11 new solar plants totaling 11.4 GW. The UAE, already sourcing 27.8% of power from renewables, plans two more Abu Dhabi solar parks of 1.5 GW each, pushing its balance to 32% by 2030. Oman and Qatar race to expand solar & wind, while Bahrain & Kuwait remain laggards. Vorontsov warns, “Policy momentum determines leadership.” High solar irradiation, exceeding 2,200 kWh/m², gives the Gulf a geographic advantage many rivals envy.

Hydrogen Horizons Herald Herculean Hopes

Hydrogen is the Gulf’s next frontier. Oman leads regionally, targeting 1 million metric tons of green hydrogen annually by 2030, expanding to 8.5 million by 2050 under its Vision 2040. Saudi Arabia eyes covering 37% of global demand by mid-century, beginning with the $5 billion NEOM project to produce green hydrogen & ammonia by 2027. The UAE aims for 1.4 million metric tons by 2031, rising to 15 million by 2050. “Hydrogen unlocks a pathway to near-zero steel,” Vorontsov observes, though he notes scaling remains complex.

Carbon Capture Catalyzes Credible Commitments

Emirates Steel partners ADNOC to capture up to 800,000 metric tons of CO₂ yearly at Al-Reyad plant, later storing it in oil fields. Oman’s Jindal Shadeed plans a facility neutralizing 700,000 metric tons annually by turning CO₂ into solid carbon by 2027. Though CCS costs vary ($11–$76 per ton) depending on gas purity, the Gulf’s depleted wells offer natural storage. “Economics hinge on concentration & capture tech,” says Vorontsov, highlighting why fertilizer plants adopt it faster than steel mills.

Greenfield Growth Guarantees Game-Changing Gains

New GCC projects embed decarbonization by design. Jindal Shadeed’s Dukma plant, slated for 2026, will produce 5 million metric tons of green steel using hydrogen & renewables. Saudi Aramco & Baosteel partner for a 1.5 million metric tons hydrogen-ready mill, while Bahrain Steel doubles DRI output to 24 million metric tons by 2028. Vale’s planned 12 million metric tons complex in Saudi Arabia initially uses gas but transitions to hydrogen. Emirates Steel eyes a 2.5 million metric tons DRI plant, half output contracted to Japan’s JFE Steel.

Policy Parity Powers Potential Performance

Saudi Arabia, UAE & Oman align national hydrogen & renewables strategies, while Qatar, Bahrain & Kuwait show slower momentum. Varied decarbonization targets, net zero by 2050 for UAE & Oman, 2060 for Saudi Arabia & Bahrain, more modest goals for Qatar & Kuwait, shape investment flows. Analysts argue policy clarity & incentives remain vital to sustain momentum amid fluctuating steel demand & geopolitical shifts.

Price Pressures Pose Persistent Perils

GCC steel faces intense global competition. In July, Saudi billet offers fell to $496 per metric ton EXW, while Chinese imports offered $456–$465 SFR. “Competing against lower-cost BF-BOF producers remains tough,” warns Vorontsov. CBAM could help GCC exports, replacing pig iron in Europe with green DRI, but securing long-term buyers remains challenging. NEOM reportedly pre-sold only half its future hydrogen output, underscoring market unpredictability.

Future Fortunes Fuel Forward Faith

Despite hurdles, the Gulf’s green steel vision remains ambitious. Local firms invest billions, embrace renewables & design hydrogen-ready facilities, betting on export demand for low-carbon products. If Saudi Arabia meets its goal to cut green hydrogen costs below $2/kg by 2030, the region could transform into the world’s preeminent green steel supplier. As Vorontsov concludes, “If anyone can leapfrog to low-carbon leadership, it’s the GCC.”

Key Takeaways

• GCC’s steel mills emit far less CO₂ than global averages, thanks to gas & renewables.

• Massive investments target hydrogen, CCS & greenfield plants by 2030–2050.

• Export growth depends on policy clarity, green premiums & hydrogen cost cuts.