Oman is moving to turn its 2035 emissions target into a financing tool, using a new carbon market framework to attract capital into low-carbon energy, industry, transport and climate-resilience projects while strengthening its position as a green investment hub.The revised framework, launched by the Ministry of Energy and Minerals as part of the updated Net Zero 2050 Strategy, aims to convert a planned 33 per cent cut in greenhouse gas emissions by 2035 into verifiable and tradable carbon credits. The target is measured against a 2024 baseline, when Oman’s total greenhouse gas emissions stood at about 94 million tonnes of carbon dioxide equivalent.
The plan divides the 2035 reduction goal into a mandatory 7 per cent cut and a further 26 per cent voluntary reduction linked to financing, technology access and capacity building. That structure is designed to give investors a clearer view of where capital can be deployed, while allowing sectors with higher abatement costs to move in phases.
Muscat is seeking to position the carbon market as more than an environmental compliance mechanism. Officials see it as a route to mobilise international finance, support small and medium-sized enterprises, create specialised jobs and give project developers a measurable basis for returns in areas such as renewable power, energy efficiency, green hydrogen, carbon capture and industrial decarbonisation.
The framework comes at a time when global capital is increasingly being screened through climate-risk and emissions criteria. Exporters in carbon-intensive sectors face tighter disclosure rules, while lenders and sovereign investors are placing greater emphasis on transition plans, certified offsets and credible emissions accounting. Oman’s ability to offer high-integrity credits could therefore become a factor in attracting manufacturers, logistics companies and clean-energy developers seeking lower-carbon production bases.
Energy remains central to the policy shift. Oil and gas still form a major share of state revenue and exports, and domestic power generation has depended heavily on natural gas. The updated strategy attempts to balance hydrocarbon continuity with a managed transition, rather than presenting emissions reduction as a sudden break from the existing economic model.
Oman’s renewable power pipeline is expanding across several governorates. Operating projects, including Ibri and Manah solar plants and the Dhofar wind project, have lifted grid-connected renewable generation, while planned schemes include solar projects in Al Kamil and Al Wafi, Sinaw and Marsa, and wind projects in Duqm, Mahout, Sadah, Shalim, the Hallaniyat Islands and Al Jazer. Projects now in operation and development are expected to raise avoided carbon dioxide equivalent emissions from about 1.62 million tonnes to nearly 9 million tonnes by 2030.
The country’s targets call for renewable energy to account for 30 to 40 per cent of the electricity mix by 2030, 60 to 70 per cent by 2040 and up to full coverage by 2050. The scale of this shift requires grid upgrades, storage, private-sector participation and long-term power purchase agreements that can lower financing risks.
Green hydrogen remains the most visible investment pillar. Oman aims to produce at least 1 million tonnes of renewable hydrogen annually by 2030, 3.75 million tonnes by 2040 and 8.5 million tonnes by 2050. Hydrom has awarded large land blocks for hydrogen projects, while Duqm has emerged as a key centre for downstream development. Agreements worth $7.5 billion signed for projects in the Special Economic Zone at Duqm included a $4.2 billion commitment linked to later phases of ACME Group’s green hydrogen project.
The investment case is supported by Oman’s solar and wind resources, available land, ports, ammonia-handling experience and location between Asian and European markets. However, the strategy also faces execution risks. Green hydrogen demand in Europe and Asia has developed more slowly than early project pipelines assumed, while high costs, certification rules, offtake uncertainty and infrastructure needs continue to test developers across the sector.
The carbon market framework is intended to address part of that gap by creating a regulated route for monetising verified emissions cuts. Strong measurement, reporting and verification standards will be essential, as weak credits would undermine investor confidence and expose exporters to reputational and regulatory risk. For Oman, the challenge is to ensure that credits represent additional and durable emissions reductions rather than becoming a paper mechanism.
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