Oman unveils net zero strategy and carbon market rules to boost green energy

Oman has introduced a revised net zero emissions strategy and a new regulatory framework for carbon markets, marking a significant step in the Gulf state’s efforts to diversify its economy and transition towards a low-carbon energy model. The government aims to achieve net zero carbon emissions by the mid-century, positioning the country as a major hub for green hydrogen and renewable energy in the Middle East. These measures are designed to strengthen national energy security, enhance the country’s trade position in the region, and attract private investment into the cleantech sector.

The Oman Centre for Net Zero, operating under the Ministry of Energy and Minerals, will be responsible for overseeing the implementation of the new plan and tracking progress on emissions. Salim Al Aufi, the Minister of Energy, described the adoption of the new strategy as a strategic step towards building a robust and sustainable economy. He stated that the initiative aligns with Oman Vision 2040 and is intended to enhance the country’s global standing. The new pathway is expected to introduce economic and climate benefits for investors in green energy and cleantech, while the carbon market framework establishes clear rules and streamlined procedures to facilitate participation by private investors and small and medium-sized enterprises.

A central goal of the strategy is to reduce carbon emissions by 33 per cent by 2035. This target will be pursued through greater energy diversification, the development of carbon capture and storage technologies, and adaptation projects across seven key sectors. These efforts are also intended to support the development of a strong carbon credit market. The government emphasised that the growth of the renewable energy and cleantech industries is expected to drive job creation and further economic diversification, reducing reliance on hydrocarbons while maintaining existing production levels.

Despite its push into renewables, Oman will continue to develop its oil and gas sectors. The country announced a bidding round for five concession areas earlier in the year and aims to maintain fossil fuel output in the coming years. According to Al Aufi, Oman’s average crude and condensate production stands at around one million barrels per day. Gas output exceeds 151 million cubic metres a day, while liquefied natural gas exports are over 11 million metric tonnes. This dual approach allows the state to leverage its existing hydrocarbon revenues to fund the transition to a greener energy mix.

The renewable energy sector has grown rapidly over the last decade, driven by the development of large-scale solar and wind power projects. The Dhofar I wind farm, with a capacity of 50 megawatts, was commissioned in 2019 in southern Oman. The 500-megawatt Ibri II solar project came online in 2021, and the expansion of the Ibri solar farm is expected to be completed in 2027. This expansion will incorporate 100 megawatt-hours of battery storage to enhance grid flexibility and support the integration of greater renewable energy capacity. Additionally, two solar power stations with a combined capacity of one gigawatt commenced operations in January 2025 in the Wilayat of Manah in the central province of Al Dakhiliyah.

Looking ahead, Oman plans to add around 5.7 gigawatts of solar and over two gigawatts of wind power, alongside one gigawatt of battery storage, by the end of the decade. The Adam Solar project, equipped with battery storage in the Al Dakhiliyah Governorate, is expected to be connected to the grid by the first quarter of 2028. Three other one-gigawatt solar projects, including Kamil Solar II, Dhofar, and Mahadah, are scheduled to come online in 2029 and 2030. The 500-megawatt Sinaw project has been awarded to a consortium led by France’s EDF.

The government is also developing pumped hydro storage capacity. The Wadi Dhayka Hydro Pump project, led by the EDF Consortium, will use the existing Wadi Dhayka Dam as the lower reservoir and a new upper reservoir on the Jabal Abyad plateau. The facility will provide almost 1.98 gigawatts of capacity and 17,970 megawatt-hours of storage over nine hours. This system will store surplus solar and wind power and release it during peak demand to enhance grid stability and reduce reliance on fossil fuels.

Oman is also advancing its green hydrogen capabilities, with plans to construct seven projects with a combined output of one million tonnes of green hydrogen per year by 2030. Although BP and a consortium including Engie and Pesco have withdrawn from some projects, the programme continues. Abdulaziz al Shidhani, managing director of Hydrom, stated at the Green Hydrogen Summit Oman in December that the programme has entered a phase of coordinated execution, with seven projects progressing through milestones. These initiatives collectively aim to establish Oman as a leading green energy hub in the region.