According to Dii Desert Energy, operational renewable capacity in MENA reached 43.7 GW by end-2025, after an annual increase of 13.4 GW compared to 2024. This expansion can support various hydrocarbon export trajectories depending on the policies applied. Solar can reduce fossil fuel consumption when it genuinely substitutes for their production, depending on how the grid operates. The fuel saved can be exported, consumed locally, stored, or remain unproduced depending on decisions and markets.
The essentials
- Operational renewable capacity in the MENA region reached 43.7 GW by end-2025, up 13.4 GW year-on-year, but gas accounts for approximately 71% of MENA electricity production.
- The central mechanism: the global effect of each solar unit depends notably on avoided production, actual exports, the fuel substituted for the buyer, and methane emissions.
- The regional pipeline reaches 202 GW of projects, but lacks cross-border sharing infrastructure and storage concentrated in just three states.
- Two trajectories are at odds through 2030-2035: a status quo where solar and fossil fuels grow in parallel, or net decarbonization requiring a reduction in global fossil fuel production.
- International accounting records in principle combustion in the country where it occurs, without attributing this combustion to a renewable installation that may have reduced domestic consumption.
44% more capacity, 71% gas in production
The figures from the MENA Energy Outlook 2026 are striking in both directions. The region has accelerated its solar deployment at a pace few observers anticipated. Saudi Arabia, the United Arab Emirates, and Egypt concentrate most of this new capacity. Solar costs in the region now reach some of the lowest levels in the world, favored by exceptional sunshine and economies of scale on large projects.
Gas accounts for 71% of electricity generation. Solar operates during the day, gas provides the baseline and nighttime peak. Without large-scale storage, renewables can still replace some fossil fuels, but their integration requires other sources of flexibility.
Electricity consumption in the Middle East is rising rapidly, driven by air conditioning, industry, and data centers. Solar absorbs some of this growth.
Gas, meanwhile, keeps running.
This picture describes how the grid currently functions mechanically, without passing judgment on the region’s energy policy. Transition takes time, and investment announcements typically leave unanswered the question of net effect on global emissions.
The freed gas goes somewhere
The reasoning is straightforward to construct and rarely articulated in official statements. Saudi Arabia burns gas to produce electricity powering its cities and industries. It is installing solar. According to the IEA, gas expansion alongside other sources can help Saudi Arabia reduce oil use for electricity; the specific effect of solar must be supported by production-by-fuel data and ideally by dispatch data or counterfactual analysis. Thus far, the climate logic holds.
What comes next depends on what it does with the saved gas. If it leaves it underground, global emissions can fall, but the effect depends notably on whether other producers replace the supply and how demand responds. If it exports it, the effect on global emissions depends on what it replaces, the emissions from its entire supply chain, and market reactions; it can be negative, zero, or positive. Yet Gulf monarchies are rentier economies: their public revenues depend on the value and volume of exported hydrocarbons. Exporting states can seek to capture value from their hydrocarbons, but the volume exported results from economic, technical, and political constraints.
Solar can simultaneously contribute to reducing electricity emissions and to energy security or hydrocarbon monetization objectives.
This mechanism is documented in economic literature: an energy substitute can coexist with increased fossil fuel production depending on export strategies. It applies to liquefied natural gas, whose export volumes from the Gulf have fluctuated. The IEA World Energy Outlook regularly points out this tension between petrostates’ climate commitments and their actual fossil fuel production trajectory.
The concrete result: emissions attributed to the Middle East can fall in national statistics, while real emissions tied to the hydrocarbons it produces remain on an upward trajectory. Territorial accounting generally assigns combustion emissions to the country where they occur, without linking them to the energy project of the selling country.
A 202 GW pipeline without regional architecture
The MENA Energy Outlook 2026 counts a total pipeline of 202 GW, including already operational, under-construction, in-development, and announced capacities. This figure is impressive. It must be read with two qualifications the report itself emphasizes.
The first constraint is geographic. Storage is an important means, among several, of allowing renewables to replace more fossil fuel generation and remains concentrated in three countries. Battery storage costs have dropped sharply over the past five years according to BNEF, but physical infrastructure remains to be built and announced projects in the rest of the region do not yet integrate this element at the necessary scale. Producing renewable electricity and distributing it are two distinct challenges, as Europe’s experience with solar grids illustrates.
The second is structural. Serious regional interconnection exists at least in the GCC, even if it does not cover the entire MENA region. Each country optimizes its own grid. Integration levels differ across countries, but the Emirates participate in GCC electrical interconnection. An integrated regional architecture would reduce the need for peaking gas through exchanges between time zones and production profiles.
Regional interconnection exists in the GCC, but does not constitute a fully integrated electrical system across the entire MENA zone.
This fragmentation has a direct consequence: backup capacity needs depend on system design, interconnections, storage, flexibility, and demand; they are not mechanically oversized in each country.
Three scenarios for 2030-2035
The long-term question concerns when renewable deployment in the Middle East will begin reducing net global emissions, not merely territorial emissions.
Three trajectories emerge for the next decade, with different probabilities and conditions.
The first scenario, under constant policy, is a status quo where solar and fossil fuel production grow in parallel. The second scenario would be net decarbonization, conditioned on a quantified commitment to reduce fossil fuel production globally, for example through an OPEC+/COP agreement or a carbon border adjustment mechanism. This scenario exists in diplomatic discussions; it has not materialized to date. COP28 in Dubai recorded the formula “transition away from fossil fuels” without verification mechanisms on production.
The third scenario would be imposed on producing states from outside, through collapse of global fossil fuel demand. According to the IEA’s STEPS 2025, oil demand reaches a plateau around 2030, while gas demand increases until 2035 before stabilizing.
In that case, petrostates would face external pressure forcing economic reorientation. Their investments in renewables would then become economic survival infrastructure. This scenario is the most transformative and most uncertain.
The blind spots of carbon accounting
There is a systematic blind spot in how energy progress is counted. National climate reports use inventories recording emissions by sources in the reporting territory. This convention has administrative logic. It has a major flaw for energy-exporting economies.
When Saudi Arabia installs a gigawatt of solar and reduces its internal gas consumption by billions of cubic meters per year, its territorial emissions fall. If that gas is exported and burned in South Asia or Europe, the corresponding emissions appear in Indian or German statistics. The exporter’s balance can improve locally if fossil fuel is avoided, but export chain emissions must be integrated. The buyer’s balance depends notably on displaced fuel and gas chain emissions, while the net effect on global emissions depends on substituted volumes and displaced fuels.
And it absolves buyers of any responsibility for the volume they import. The question of who actually finances decarbonization and at what cost also runs through debates on alternative fuels in aviation, where the same tensions between territorial accounting and global accounting arise.
Two collective needs emerge from this diagnosis. The first is carbon accounting that includes exported fossil emissions in the exporting country’s balance sheet, or that creates a separate account for this flow. The second is conditionality on green financing: development banks, sovereign wealth funds, and climate finance mechanisms supporting renewable projects in the Middle East could require a quantified commitment not to increase substituted fossil fuel production.
The signals that will determine the path
Between 2025 and 2028, three indicators will reveal which trajectory the Middle East actually follows.
The first is the volume of liquefied natural gas exports from major producers after 2025 solar installation. Stagnant or declining exports do not, without supplementary analysis, identify the cause.
The second is the composition of the 202 GW pipeline by technology type, particularly the share of projects including storage. Pipeline composition alone is insufficient to determine whether solar will complement or displace gas generation. A shift toward projects integrating storage would signal genuine substitution ambition.
The third is the evolution of solar tariffs relative to the cost of domestic gas in each country. A fall in solar costs can reshape energy arbitrage, without mechanically determining fossil export levels. This parity threshold has been reached or is near in several countries in the region.
These signals are observable, sourced, and verifiable. They transform a discussion of intentions into a reading of actual behavior. This is the reading that international climate policy should anchor to rather than announced capacity installations.
Sources
- MENA Energy Outlook 2026, Dii Desert Energy / carboncredits.com
- IEA World Energy Outlook 2026, International Energy Agency (iea.org)
- BNEF Battery Storage Cost Survey 2025, BloombergNEF
- Ember Global Electricity Review 2025, Ember Climate (ember-climate.org)
- IMARC Middle East Renewable Energy Market Report 2025, IMARC Group
