The Sultanate of Oman’s

National Strategy for an

Orderly Transition to Net Zero
November 2022
2
Contents

Foreword by His Excellency the Minister of Energy and Minerals 5

Preface 7
Executive summary 9
Oman’s emissions baseline 12
An orderly transition 16
Implications of an orderly transition for Oman 36
The way forward 40

3
 His Excellency, Eng. Salim bin Nasser bin Said Al Aufi, Minister of Energy and Minerals

4
Foreword by His Excellency
the Minister of Energy and Minerals
As the world increasingly experiences the effects of global climate change, the imperative
to decarbonize and transition the world’s economies to cleaner energy has never been
greater. The momentum of the global energy transition continues to gather pace and nations
must decide how they will position for the future. To this end, the Sultanate of Oman has
taken the bold step to define a pathway toward a more sustainable and prosperous future
for all Omanis.

Under the leadership of His Majesty Sultan Haitham bin Tarik, Oman has announced its
commitment to achieve net zero emissions by 2050, in line with the Paris Climate Agreement’s
objective of limiting global climate change to below 1.5C compared to pre-industrial levels.
With this commitment, the Sultanate has staked a position amongst the leading nations on
the world stage in defining a sustainable pathway to the future.

This document introduces Oman’s vision of its journey to net zero emissions by 2050. Oman’s
will be an orderly energy transition, underpinned by a set of fundamental objectives: ensure
environmental sustainability, minimize economic costs to Omani citizens and industries,
optimize the economic impact arising from the transition, encourage job creation, and
ensure a secure energy supply.

The vision is as compelling as it is challenging – the transition will involve many changes to
the economy and will involve trade-offs along the way. But thanks to Almighty Allah, Oman
is blessed with a bountiful endowment of natural resources to support the transition: plentiful
sunlight, ideal windspeeds and a favorable geographic location to grow a new hydrogen
economy.

While the net zero 2050 pathway is a critical step in the journey, it is only the beginning. With
the announcement of the creation of the Oman Sustainability Center, the Sultanate has laid
the foundation to ensure the necessary supervision, implementation, and support for the
net zero 2050 plan.

With the guidance of Almighty Allah, we are starting on the journey toward a more sustainable
and prosperous future for all Omanis.

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6
Preface
Under the leadership of His Majesty Sultan Haitham bin Tarik, in October of 2022 Oman
announced its commitment to achieve net zero emissions by 2050. With this commitment,
Oman joins a group of over 70 countries1 that have pledged to achieve net zero emissions
by 20502. It aligns with the Sultanate’s 2040 vision to be “the gateway to overcome challenges,
keep pace with regional and global changes, generate and seize opportunities to foster
economic competitiveness and social well-being, stimulate growth, and build confidence in
all economic, social, and developmental relations nationwide”3.

To this end, the Sultanate of Oman commissioned a project to revalidate its baseline emissions
and understand its options to attain net zero by 2050.

This report presents the findings of that work. It establishes a new current emissions baseline
and explores the potential pathways that Oman could follow to achieve its net zero aspiration
focusing in detail on one – an orderly transition. It does not constitute a forecast, estimate
or projection of the future, nor is it intended as a recommendation of the pathway Oman
should follow.

1 For a liveable climate: Net-zero commitments must be backed by credible action, United Nations Climate Action, https://www.un.org/en/climatechange/net-
zero-coalition
2 Oman sets 2050 goal to achieve net-zero carbon emissions, Mina Aldroubi, 17 October 2022, The National News, https://www.thenationalnews.com/gulf-news/
oman/2022/10/11/oman-sets-2050-goal-to-achieve-net-zero-carbon-emissions/
3 Vision Document, Oman 2040 vision, https://isfu.gov.om/2040/Vision_Documents_En.pdf

7
8
Executive summary
As of 2021, Oman’s net emissions totaled approximately 90Mt CO2e, with five sectors
contributing ~95% of net emissions—industry, oil and gas, power, transport, and buildings.
Unless it acts now, Oman is set to increase emissions by 16% to 104 Mt CO2e by 2050.

Oman could adopt several different paths to net zero by 2050. To make the transition smooth
and sustainable, Oman has set five objectives for its path: environmental sustainability, energy
system costs, economic impact, social impact and security of supply.

Three main archetypes exist for Oman’s transition: delayed, accelerated and orderly pathways.

A delayed transition would sustain existing export industries for as long as possible and activate
the lowest-cost emissions abatement initiatives as late as possible. This pathway would
optimize for two of the five objectives – minimizing energy system costs and adverse economic
impact. However, in the long run a delayed transition pathway could result in stranded assets
and missed opportunities in future green value pools.

At the other end of the spectrum, an accelerated transition would focus on early and fast
decarbonization across all sectors and would achieve the environmental sustainability
objective. However, it could increase energy system costs in the long term as technologies
may be adopted earlier than economically viable and assets may be forced to retire.

An orderly transition offers an attractive middle option that would allow Oman to achieve its
net zero goal by 2050. This path would implement the lowest-cost decarbonization levers
first as they become economically viable, then activate levers to address harder-to-abate
emissions. Individual sectors would decarbonize at different paces, but the national pathway
would consider all five objectives.

An orderly transition path could help Oman abate 97 Mt CO2e by 2050, with decarbonization
through 2030 and 2040 accounting for 6% and 54% of the total pathway respectively relative
to 2021 emissions. Industry, oil and gas and transport would drive these efforts. This pathway
would result in a remaining “last mile” gap of ~8% (7Mt) that could be addressed through
breakthrough decarbonization technologies and natural negative emissions (e.g., direct-air
capture (DAC) of carbon with storage in depleted reservoirs or planting mangrove trees to
absorb atmospheric carbon), and critical behavioral changes (e.g., substituting carbon-intense
products or materials).

Six main decarbonization technologies would support an orderly transition: energy and resource
efficiency, electrification and renewables, battery electric technology, sustainable hydrogen,
carbon capture and storage and negative-emission solutions. Together, these technologies
would cover ~90% of abatement to 2050. However, the decarbonization targets would
require technology to mature (e.g., long-duration energy storage), building new infrastructure
(e.g., electric vehicle charging networks), increasing adoption levels (e.g., uptake of electric
vehicles) and introducing policies and legislation (e.g., policies to incentivize behavioral
changes) and market mechanisms (e.g., carbon pricing).

9
 The net zero pathway would cost ~USD 190 billion additional capital investment relative to
Oman’s “business-as-usual” scenario (~15% net of opex savings). This spending would cover
power and hydrogen infrastructure (e.g., upgrading and extension of Oman’s electricity grid,
hydrogen pipelines and storage, electric vehicle charging infrastructure and at-scale deploy-
ment of long-duration energy storage). If we include investment required to unlock a hydrogen
export economy, the capital investment required would increase by an additional ~USD 230
billion. These expenditures are not expected to be financed fully by the Government; public
estimates suggest that the private sector could finance 70-80% of the global energy transition
to 20504.

This investment would also help Oman to achieve its broader energy transition objectives:

� Energy system costs. The pathway would affect sectors differently (Exhibit 9). For example,
in transport it could reduce the total cost of vehicle ownership by ~20-25% by 2050 (even
with the required charging infrastructure). In power, the transition to solar and onshore wind
could halve generation cost per kWh (upfront infrastructure costs are expected to be
recovered by approximately two-thirds of the aggregate cost savings through 2050). However,
in industry it could increase the levelized cost of steel production by 10-15% (which may
be offset by a green steel premium in the short term).

� Economic impact. An orderly transition could contribute an additional 50% to GDP by

2050 (vs 2021), two-thirds of which would come from domestic investment in hydrogen
(including export infrastructure) and the rest from expanded green power capacity. Electrifying
the economy could free up a large amount of gas, creating a compelling opportunity for
Oman to capture a fuel “double play”, i.e., ramp up export of LNG and hydrogen.

� Social impact. Together with new green business growth opportunities, an orderly transition
could increase total employment in Oman by 20-30%, mainly in the power sector (~43%
of total new direct jobs) and the emerging hydrogen economy (~55% of total new direct
jobs in domestic and export markets). Omani citizens could be upskilled and reskilled,
e.g., in clean technologies like hydrogen, electric vehicles and carbon capture and storage,
to supply trained workers to fill these jobs.

� Security of supply. By 2050, Oman could become self-sufficient in power and hydrogen,
using hydrocarbons during the transition. However, an orderly transition also implies
greater dependency on several imported clean technologies and materials, e.g., batteries,
electric vehicles and rare earth metals.

To follow this path, Oman should continue to build momentum. This would involve balancing
longer-term planning with near-term delivery by deciding which priority levers to implement
first to unlock their full potential, capture immediate value and remove future bottlenecks. It
would require an integrated approach underpinned by clear ownership and accountability.
The recently announced Oman Sustainability Center would play an important role in establishing
governance and cadence to track progress, communicate with stakeholders and develop
investment plans. To change behavior on the ground, policies, legislation, and regulation should
align across sub- and cross-sectoral policies.
4 Accelerating private finance for the Arab renewable energy transition, EU Parliament, IEA, IRENA, Whitepaper CEBC and SDG, 2021

10
Objectives for Oman’s Orderly Transition

Reduce carbon emissions to reach

Net Zero by 2050 and minimize the
overall carbon budget

Environ-
Ensure system mental Minimize energy
security through sustain- costs to the
self-sufficiency, ability domestic
system stability, Energy population
and low-risk system and energy-
access to costs dependent
supplies​ domestic
sectors​

Guiding
Security
of supply principles

Economic
impact Optimize for
macroeconomic
benefit, solving for
Social
Solve for job retention stable fiscal revenues,
implications
and future job creation and GDP through existing
potential and new value pools

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 1. Oman’s emissions
baseline

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 In 2020, the Sultanate of Oman released its second Nationally Determined Contributions (NDCs)
to reduce greenhouse gas (GHG) emissions by 7% by 2030 against a baseline of ~125Mt CO2e
(2030 business-as-usual emissions). As part of its recent net zero 2050 announcement, the
Sultanate commissioned a team to collect and verify emissions data through Oman’s Carbon
Management Lab to validate the country’s emissions baseline.

Oman’s 2021 carbon emissions have been assessed at 90 Mt CO2e (Exhibit 1). Five sectors
account for 95% of these emissions: industry, oil and gas, power, transport and buildings.
Industry produces the lion’s share at 32%, followed by oil and gas at 25%.

Exhibit 1: Oman’s net carbon emissions

Mt CO2e, 20211 Mt CO2e, 2021 Cross-sectoral emissions Sector not modeled bottom-up
1
Cross-sectoral emissions Sector not modeled bottom-up

Total emissions: Total

~90 emissions:
Mt CO2e ~90 Mt CO2e

5.4 (6%) 5.4 (6%)

28.4 (32%) 28.4 (32%) 22.9 (26%) 22.9 (26%)
17.1 (19%) 17.1 (19%)
15.9 (18%) 15.9 (18%)
2&3 Wheelers 2&3 Wheelers
F-gases Buses Buses
F-gases
Light Light
Iron & steel Iron & steel Commercial Commercial
Vehicles Vehicles
Aluminum Aluminum
Upstream production
Upstream production

Cement Cement
Passenger Passenger
Solid cars Solid
cars waste
Urea & ammoniaUrea & ammonia waste
Power Power
Methanol Methanol Live- Live-
stock stock
Petrochemical industry
Petrochemical industry
Flaring Flaring

Petroleum
Industry
Petroleum
refining Industry refining
Oil & Gas
Oil & Gas
Power
Power Transport Buildings Waste Agri LULUCF
Transport Buildings Waste Agri LULUCF
Waste Waste
Fugitives/ventingFugitives/venting water
High-temperature heat Trucks water
Trucks
High-temperature heat
Other Other
Low/medium- Low/medium-
industry industry LNG LNG
temperature heat temperature heat Other Other

Industry Industry Oil & Gas Oil & Gas

Power Power
Transport Transport
Waste Agri Waste Agri

Oman currently has a strong reliance on gas, mainly for industry, upstream operations, and
Buildings LULUCF
Buildings LULUCF
power. The warm climate is driving cooling demand for buildings

1. 1. for
With adjustments With adjustments
short-term for short-term Covid-impact
Covid-impact
The maritime and aviation
Source: Oman’s Carbon Management Lab Management
Source: Oman’s Carbon industry
Lab are not considered here, since it’s outside of the remit of
the Paris agreement

13
 By 2050, Oman’s emissions are set to rise 16% to 104 Mt CO2e unless it takes action to reduce
the amount of emissions it produces. The Sultanate is therefore evaluating energy transition
pathways that could help it curb these numbers and reach its net zero goal.

Oman has identified five objectives for its transition pathway. First, it should help the country
achieve environmental sustainability by reaching net zero and minimizing the cumulative
carbon budget by 2050. It should minimize energy system costs for Omani citizens and
businesses while optimizing economic impact impact including fiscal outlook and gross
domestic product (GDP). It should factor in the social impact of the transition in terms of
creating jobs. And it should maximize security of supply to ensure that demand centers
are connected to the grid and that the system provides a stable supply of electricity.

Multiple pathways are open to Oman in its journey to reach net zero. They fall under three
broad archetypes: delayed , orderly and accelerated transition (Exhibit 2).

A delayed transition transition would sustain Oman’s existing export industries and introduce
decarbonization levers as late as possible. This pathway would prioritize two of the five guiding
principles: energy system costs and economic impact. However, it could have a negative
effect on the economy in the long term as it risks creating ‘stranded assets’, e.g., legacy
energy assets such as gas power generation plants that may become uncompetitive as the
global energy system evolves. It could also mean that Oman loses out by failing to stake an
early claim in new green businesses that offer valuable future revenue streams, e.g., hydrogen.

At the opposite end, an accelerated transition would decarbonize sectors early and fast to
minimize the total carbon budget and match the commitments of other front-runner countries
(55% carbon emission reduction by 2030 5) – thus prioritizing environmental sustainability.
This path could be more expensive in the near term, as it would likely require the uptake of
technologies before they are economically viable and would incur forced abatement costs
induced by pivoting away from existing assets before their natural replacement cycle.

An orderly transition represents the middle ground. It would focus first on decarbonization
levers with the lowest abatement costs, and then on segments that are harder to abate. This
would be a more gradual transition that would pace adoption rates of green technologies
(e.g., purchase of electric vehicles) to that of peer countries and would time major system
changes to coincide with natural asset replacement cycles (e.g., replace low-and medium
temperature furnaces with electric boilers at the end of their lives). Individual sectors would
decarbonize at different paces, but this pathway would help Oman achieve all five of its
transition objectives.

The remainder of this report explores the opportunities and impact for Oman presented by
an orderly transition.

5 The European Union has committed to reduce its greenhouse gas emissions by 55% by 2030 through the Fit for 55 package

14
Exhibit 2: Three archetypes for Oman’s energy transition

In comparison to the Business-as-Usual scenario

Delayed transition Orderly transition Accelerated transition

Pathway description

Focus on sustaining the existing Focus on decarbonization levers Early and fast decarbonization
export industries, implementing with the lowest abatement costs across sectors aligned with the
the most cost-attractive (priority levers), followed by European targets, minimizing
initiatives only when latest segments that are hard-to-abate the required carbon budget
required to reach Net Zero (optimizing for economic gain, and matching the commitment
and staying within sustainable of other front-runners (i.e., 55%
fiscal and cost limits) reduction by 2030)

Abatement Pathway, CO2e

2021 30 40 2050 2021 30 40 2050 2021 30 40 2050

Carbon budget, Mt CO2

~2,100 ~1,760 ~1,500

Leading objectives

Considerations

Delayed transition is often Optimizing for (long-term) Uptake of technologies before

disruptive and can in the long- economic gain and these are economically viable,
term result in asset stranding, environmental impact adopting larger technology and
whilst leading to higher security of supply risks, as well
Enabling gradual transition and
cumulative emissions as forced retirement costs
adoption rates to allow for match-
Unsustainable price flare-ups ing natural switching points and Economically suboptimal
for consumers as legacy repurposing of gas consumption because of asset stranding and
products become scarce or from power and industries forced retirement costs to reach
uncompetitive, whilst focus on short-term abatement targets
existing revenue streams can
limit the uptake of future green
DETAILED PATHWAY
value pools

Source: Oman’s Carbon Management Lab

15
 2. An orderly transition

16
In considering a pathway to net zero emissions, two categories of lever were identified: priority
decarbonization levers (those with the lowest cost of abatement) and system choices (levers
that entail trade-offs to address hard-to-abate emissions).

Under an orderly transition, priority decarbonization options levers would optimize for all five
of Oman’s transition objectives. They are expected to drive half (52 Mt) of the abatement
Oman seeks to achieve by 2050 across all sectors, driven largely by the industry, power and
transport sectors (Exhibit 3).

Exhibit 3: Priority levers across the five key sectors

Abatement compared to baseline emission trajectory, Waste, agriculture and LULUCF

Mt CO2e
Business-as-Usual outlook
110
100
90
80
70
60
50
40 Multiple
30 pathways
possible
20 An Orderly
10 Transition pathway

2021 25 30 35 40 45 2050

Key priority levers (not exhaustive)

Industry Electrify low/medium-temperature heat across industries,

feedstock changes in steel, cement, PetChem, and selective
grid connections

Oil & Gas Electrify low/medium-temperature heat and implement

efficiency improvements, LDAR1 for fugitives, and
repurpose/export flared gas

Transport Wide transition to EVs2 and H2-fuel cells for long-distance trucks
and buses, behavioral changes reducing car usage, biofuels
blending for lower emissions from ICE3 vehicles

Buildings Improve insulation standards for new builds, improve energy

(incl. in power) efficiency of air conditioning units, and other electrical equipment

Power Deploy renewable power generation at large scale, mainly

driven by solar PV and onshore wind

1. Leak Detection and Repair 2. Electric Vehicles 3. Internal Combustion Engine

Source: Oman’s Carbon Management Lab

17
 For example, priority levers for the industry sector could include electrification of low-to-medium
temperature heat processes, changing the feedstock in cement production (e.g., substituting
clinker) and making selective grid connections. The power sector could deploy solar and wind
power generation at scale. The transport sector could transition to electric light vehicles
and hydrogen fuel cells for long-distance trucks and buses, whilst supporting behavioral
changes to reduce (individual) car usage.

Exhibit 4: Systems choices for harder-to-abate emissions

Abatement
Abatement compared
compared to
to baseline
baseline emission
emission trajectory,
trajectory,
Mt CO e
Mt CO22e
Business-as-Usual
Business-as-Usual outlook
outlook
110
110
100
100
90
90 Priority
Priority
80
80 levers
levers
70
70
60
60
50
50
40
40
30
30
20 An
20 An Orderly
Orderly
10 Transition
Transition pathway
pathway
10
2021
2021 25
25 30
30 35
35 40
40 45
45 2050
2050

5
5 key
key areas
areas with
with system
system choices
choices Positioning in Orderly Transition scenario
Positioning in Orderly Transition scenario

Industry How Further electrification

Industry How toto decarbonize
decarbonize the
the Further electrification
hard-to-abate
hard-to-abate sectors?
sectors?
CC(U)S Hydrogen
CC(U)S Hydrogen

Oil
Oil &
& Gas How
Gas How to
to decarbonize
decarbonize the
the Further
sector? Further CC(U)S
sector? electrification CC(U)S
electrification

Buildings How
How toto optimally
optimally cool
District Cooling
Buildings cool District Cooling
existing
existing buildings?
buildings? Rapid demand Active retrofits
Rapid demand Active retrofits
response management and insulation
response management and insulation

Power How RES + gas + CC(U)S

Power How to
to deliver
deliver baseload?
baseload? RES + gas + CC(U)S

RES + Nuclear RES11+ LDES22

RES + Nuclear RES + LDES

“Last Technology-based Nature-based

“Last mile”
mile” How
How to to close
close the
the Technology-based
solutions
Nature-based
solutions
to
to Net
Net Zero
Zero final gap? solutions solutions
final gap?

1. Renewables (mainly solar PV and onshore wind)

1. Renewables (mainly solar PV and onshore wind)
2. Including pumped hydro
2. Including pumped hydro
Source: Oman’s Carbon Management Lab
Source: Oman’s Carbon Management Lab

18
Harder-to-abate emissions would require more difficult system choices with trade-offs (Exhibit 4).
For example, oil and gas players would have to choose between addressing remaining
emissions through electrification (e.g., of combined heat processes and LNG plants) or via
carbon capture and storage.

An orderly transition would activate both priority levers and system choices to lower emissions
6% by 2030, 54% by 2040 and 92% by 2050 compared to the 2021 baseline (Exhibit 5). This
would leave a “last mile” gap of ~8% (7Mt) to achieve net zero by 2050. Oman could cover this
gap through breakthrough decarbonization technologies and engineered or natural negative
emissions (e.g., DAC of carbon with storage in depleted reservoirs or by planting mangrove
trees to absorb atmospheric carbon), and changing behaviors, e.g., substituting carbon-intense
products or materials).

The Second NDC aspires to reduce GHG emissions 7% by 2030 against a baseline of ~125 Mt
CO2e business-as-usual emissions. Under an orderly transition, emissions abatement by 2030
would be ~6% (relative to the 90 Mt CO2e 2021 baseline determined during Oman’s Carbon
Management Lab), however, ~20% relative to Oman’s 2030 business-as-usual scenario.

The total carbon budget for the pathway would be 1,760Mt CO2e to 2050.

Exhibit 5: Projected decarbonization efforts to 2050

Pace of GHG emission reduction per sector, 2021-2050, Mt CO2e1

110
Decarbonization
100 Business- vs. 2021, percent
as-Usual
90
outlook Sector 2030 2040 2050
80
2
70 Industry 13 -43 -86
60
Oil & Gas -7 -84 -94
50
40
Transport -3 -34 -100
30
3 3 3
20 Buildings 5 14 10
Seven key areas with system choices
10
Power -3 -57 -99
0
2021 30 40 2050
Other4
Vs 2021 -6% 1 -54% -92%
Vs BaU -21% -62% -93%

1. Emission reduction compared to 2021 level; resulting 2030 projection of ~85 MT CO2e compared to the original
target of ~116 MT CO2e based on a 7% reduction and a baseline of 125 MT CO2e
2. Emissions increase due to production capacity expansion in cement and iron & steel
3. Indirect emissions; emissions accounted for in the power sector
4. Out of scope (waste, LULUCF, agriculture)
Source: Oman’s Carbon Management Lab

19
 Industry
Decarbonization levers in each sector would support the pathway as described below.

Baseline and growth  Petroleum refining, petrochemical industry and cement

account for ~50% of emissions in 2021

32%  ~8 BCM p.a. of natural gas available to be repurposed

in 2050
of Oman’s
28.4 Mt  Growth in the business as usual case in 2050 (26%) is
CO2e
mainly driven by planned expansions in 2025
emissions
in 2021

Levers Petroleum refining Aluminum Urea & ammonia

Emissions reduction by lever Petrochemical industry Iron & steel Other industry
to 2050, Mt CO2e Cement Methanol F-gases

+26% -89%
35.7 11.7
28.4 7.3
6.8
6.4
3.4
1.2 2.2 4.0

Baseline Change in BAU Process Hydrogen CC(U)S Grid Process Montreal Last-mile
2021 activity level 2050 electrification connection efficiency Protocol emissions
2050

Pathway and technological enablers Broader implications

Anticipated emission
reduction, Mt CO2e
~6-7 Mtpa 10-15%
40 CO2e CC(U)S capacity increased cost for changing
+13% required by 2050 to hydrogen-based steel,
-43% -86%
could potentially be offset by

20
~70 TWh a “green premium” in the
short term
of renewable electricity
required by 2050 for ~8 BCM p.a.
electrified assets
of natural gas available to
0 be repurposed in 2050
2021 30 40 2050

Activity level by segment

Change in technology route for production – scaled and indexed to 2021 emissions

135
21% Electrification

27% Electrification & CC(U)S

90
CC(U)S
16%
45 Hydrogen
29% Technology development
7% Conventional
0 0%
2021 25 30 35 40 45 2050

20
 Industry
Industry produces 28.4 Mt of CO2e – 32% of Oman’s total emissions – and
this number is projected to grow to 35.7 Mt by 2050 under a business-as-
usual scenario driven largely by petroleum refining, petrochemicals, cement,
aluminum, iron and steel. This sector is the biggest carbon emitter but low-
cost levers have the potential to abate ~41%, mainly by electrifying refining
and low-to-medium temperature heat processes (14%), connecting selected
sectors to the grid (9%), and increasing hydrogen-based steel production (8%).

System choices entailing trade-offs would be required for the ~48% of

emissions that are harder-to-abate. Three main technologies could be con-
sidered: electrify costly processes in the petrochemical, aluminum and
cement industries as technology matures and assets need to be replaced;
replace gas with green hydrogen when economically feasible; and deploy
carbon capture, utilization and/or storage (CC(U)S ) after 2030 in hard-to-abate
sectors (cement, ammonia, methanol, petrochemicals). The remaining 11%
(4.0Mt CO2e) would fall under last mile measures.

By 2050, alternative production methods would almost fully replace conventional

production. The energy mix would change from hydrocarbon-dominant to
a 50/50 split with renewable sources.

21
 Oil & Gas

Baseline and growth  Fuel consumption from upstream production contributes

more than half of the emissions in oil & gas in 2021

25%  ~3 BCM p.a. of natural gas available to be repurposed

in 2050
of Oman’s
22.8 Mt  Current increasing emission trajectory in business as
CO2e
usual case is expected to peak in 2030, resulting in a
emissions
50+% reduction by 2050
in 2021

Levers Production Fugitives/venting

Emissions reduction by lever to 2050, Mt CO2e Flaring LNG

-54% -94%
22.8

12.3
10.5 1.1 2.0
2.1
1.1 1.8 1.1 1.3

Baseline Change in BAU Efficiency Process CC(U)S Grid Repur- Operational Last-mile
2021 activity 2050 improve- electri- connection pose excellence & emissions
level ment fication gas infrastructure 2050
replacement

Pathway and technological enablers Broader implications

Anticipated emission
reduction, Mt CO2e
~10-15 TWh 60-70%
30 of renewable electricity of abatement potential is
-7% -84% -94% required by 2050 for economical with a carbon
electrifying production price of 100 USD/t
20

10 ~1-3 Mtpa ~3 BCM p.a.

CO2e CC(U)S capacity of natural gas available to be
required by 2050 repurposed in 2050
0
2021 30 40 2050

Emissions abated per lever, Mt CO2e

Conventional
30
Electrified
25
CCUS
20 Efficiency improvement
15 Operational efficiency
10 Replaced infrastructure & assets
Grid connection
5
Repurposed gas
0
2021 2030 2040 2050

22
 Oil and Gas
The oil and gas sector accounts for 22.9Mt of CO2e and ~26% of Oman’s
total emissions in 2021. The business-as-usual scenario forecasts a ~50%
reduction in emissions from current production by 2050. It is assumed that new
production from exploration above this projection would be fully decarbonized.

Combined, the lowest cost decarbonization levers could abate ~23% of the
sector’s total emissions. These levers would include continuing ongoing
energy efficiency measures, capturing and repurposing natural gas (mainly
from flaring), enhancing production and flaring efficiency and lower-cost
electrification of upstream production processes.

Trade-offs would need to be considered around the remaining abatement

required through more costly electrification (e.g., of LNG terminals) or CC(U)S .

Full electrification of the sector would require upgrades to the electricity grid,
more extensive renewable energy generation and long-duration energy
storage. The economic feasibility of CC(U)S would depend on the availability
of concentrated point sources of carbon, enhanced oil recovery (EOR)
opportunities, scale and/or carbon pricing. Upstream oil and gas is characterized
by disperse low-concentration gas streams, making capture more complex.
CC(U)S is more broadly applicable downstream where there are more concen-
trated point sources. Cross sectoral projects (CC(U)S + H2) and scaling would
help reduce the cost of CC(U)S . Replacing existing infrastructure (pipelines)
and assets (compressor rod packaging, seals, connections) would eliminate
remaining emissions directly addressable by the sector.

Together, these system choices could address ~18% (4.0Mt CO2e) of emissions
abatement, leaving 6% (1.3Mt of CO2e) for last-mile measures.

23
 Power

Baseline and growth  97% of electricity in 2021 is generated by fossil fuels, mostly
natural gas

19%  ~13 BCM p.a. of natural gas available to be repurposed in 2050

of Oman’s
 Growth in the business as usual case (58%) is mainly driven by
17.1 Mt an increase in electricity demand in industry and buildings
CO2e
emissions  Growth would increase by 359% if accounting for the electricity
in 2021 demand increase driven by electrification in a net zero pathway

Levers Diesel generators Onshore wind

Emissions reduction by lever to 2050, Mt CO2e Gas Gas with CC(U)S
Solar Nuclear

+359% -99%
78.3 48.6

61.3
14.1
17.1 7.8
7.8
0.1
Baseline Change in BAU Solar PV Onshore Gas with Nuclear Last-mile
2021 activity level 2050 wind CC(U)S emissions
2050

Pathway and technological enablers Broader implications

Anticipated emission
reduction, Mt CO2e
65 Mtpa ~50%
20 -3% -57% -99% of renewables with reduction in total system
15-30 GW of Long Duration costs by 2050, likely to be
Energy Storage able pay back additional
Capex by ~2045
10
5 GW
capacity of a combination of ~13 BCM p.a.
gas + CC(U)S and nuclear of natural gas available to
0
2021 30 40 2050 be repurposed in 2050

Activity level by segment, TWh

180 Diesel generators

150 Gas
Solar
120
Onshore wind
90
Gas with CC(U)S
60
Nuclear
30
0
2021 30 40 2050

24
 Power
The power sector accounts for 17.1Mt CO2e of emissions, which equates
to 19% of Oman’s overall emissions. Today, approximately 92% of electricity
is generated by fossil fuels, mostly natural gas. Emissions are expected to
rise 58% (9.8Mt CO2e) by 2050 under the business-as-usual scenario on
the back of rising electricity demand in the industry and building sectors.
An orderly transition pathway would see the electrification of the remaining
sectors and total emissions for the power sector (if unabated) would rise 4.5
times to 78.3Mt CO2e.

The pathway to net zero involves building out renewables (mainly solar PV and
onshore wind) to ~60% of the power supply mix, without significant (long-
duration) storage requirements. Oman’s strong wind and solar resources
already make these renewable technologies 20-25% cheaper than new
gas-fired power plants.

To decarbonize the remaining 40% of fossil-based power supply, Oman could

select technology options that balance economic and strategic implications.
These could include further renewables penetration with long-duration energy
storage, supported by a combination of low-utilization gas with CC(U)S and/
or nuclear. A decision on the final mix of technologies would not need to be
immediate. In the short term, Oman would focus on building out its renewables
to reach 60% penetration around 2034. Over the next five years, technology
costs will decline and market mechanisms (e.g., carbon pricing) will become
clearer.

25
 Buildings

Baseline and growth  As the buildings sector is entirely electrified, there are no
scope 1 emissions
 The buildings sector consumes ~80% of the electricity and
0% thereby is indirectly contributing ~15% to Oman’s total
of Oman’s emission through the power sector, mostly driven by cooling
13.5 Mt demand in the residential sector
CO2e
emissions  Energy consumption Growth in the business as usual case
in 2021 by 2050 (~90%) is driven by an increase in dwellings to
house expected population growth

Levers
Electricity consumption reduction by lever to 2050, TWh

+86% ~-40%
194
30 2 25
90 9 13
104 114

Baseline Change in BAU 2050 Efficiency LED New build DRM Retrofits 2050
2021 activity improvements lighting insulation Net Zero
level standards scenario

Pathway and technological enablers Broader implications

Anticipated electricity
consumption in pathway, TWh
1.5% <15-year
60 ~-30%
~-40% per annum payback time of active
retrofits of residential
retrofitted dwellings between buildings, including improved
~-20%
40 2021-2050 insulation and solar panels

20 7.5% reduction
in the energy demand by
0 2050 through rapid demand-
2021 30 40 2050 side response management

Activity level by segment, # of dwellings

+1.2
3 (+87%)

Commercial
2 Governmental
Residential

0
2021 25 30 35 40 45 2050

26
 Buildings
The building sector has no direct emissions as it is fully electrified. However,
the sector consumes 80% of power demand (2021) and therefore indirectly
accounts for ~13.5 Mt CO2e in the power sector (or ~15% of Oman’s overall
emissions).

Low-cost priority levers could reduce total energy demand ~30% by 2050
versus business-as-usual by improving the energy efficiency of air conditioning
units and appliances, switching to LED lighting, and setting building standards
for all new builds (e.g., insulation, solar panels and smart design such as
passive cooling). As the power sector moves toward full decarbonization by
2050, reducing energy consumption will lower system costs rather than
further contributing to emissions savings.

The systems choices to be considered are retrofitting current buildings and

rapid demand response management (DRM) to further reduce electricity
consumption by ~10% by 2050.

27
 Transport

Baseline and growth  Emissions in 2021 are driven by passenger cars

(~60%) and trucks (~29%)

18%  ~50mn BOE p.a. of oil available to be repurposed

in 2050
of Oman’s
15.9 Mt  Growth in the business as usual case in 2050 (41%)
CO2e
is mainly driven by an increase in vehicles
emissions
proportional to population increase
in 2021

Levers 2&3 Wheelers LCVs Trucks

Emissions reduction by lever to 2050, Mt CO2e Buses Passenger cars
+41% 2.3
22.4
1.0 18.0
15.9 6.5

1.1

Baseline 2021 Change in BAU 2050 Behavioral Biofuels Electric H2-powered

activity level changes Vehicles fuel cells

Pathway and technological enablers Broader implications

Anticipated emission
reduction, Mt CO2e
16 TWh ~20-25%
20 of electricity required by full average reduction in cost
3% 34% 100% electrification of light vehicles of owning a car by 2050,
including charging

10 ~0.1 Mtpa infrastructure investments

of hydrogen required by
transition to H2-fuel cells for ~50mn BOE p.a.
long-distance buses and of oil available to be
0 trucks
2021 30 40 2050 repurposed in 2050

Activity level by segment, bn vkm

60
BEV Trucks BEV LCVs and
2&3 Wheelers
40
FCEV Trucks ICE Trucks
BEV Cars ICE Cars
20 BEV Buses ICE Buses
FCEV Buses ICE LCVs and
2&3 Wheelers
0
2021 30 40 2050

28
 Transport
The transport sector emits 15.9Mt of carbon each year or 18% of Oman’s
emissions in 2021. Passenger cars make up ~60% of this total (1.3 million
cars account for ~87% of the transport fleet). Emissions are expected to grow
by 41% by 2050 under a business-as-usual scenario, driven by population
growth.

The pathway to net zero involves full electrification of light vehicles and short-
distance heavy vehicles and a transition to hydrogen fuel cells for long-
distance heavy vehicles. Behavioral changes such as increased use of public
transit and car-pooling are expected to reduce car usage resulting in 10%
lower emissions.

Uptake of battery electric vehicles (2023-30) and fuel-cell electric vehicles (2035)
is expected to rise when their cost matches that of internal combustion
engine (ICE) vehicles from a total cost of ownership perspective. Government
fleets are expected to lead the transition by adopting these technologies
early.

Policy changes and investment in infrastructure would be needed to see full

penetration of electric vehicles and fuel-cell electric vehicles by 2050.

29
30
The last mile
Several options could help reduce the remaining 7Mt CO2e of
hard-to-abate emissions.

Oman could lead in negative emission technologies that will

likely be required to reduce most emissions (e.g., DAC that
removes atmospheric CO2 directly from the air and carbon
utilization or storage), as it has a large number of aquifers and
a vast amount of peridotite rock, a rare material that has unique
carbon absorption and storage properties. Together with
behavioral changes, this could abate most of the last mile. Nature-
based solutions, such as mangrove tree planting or grassland
management could help to abate the remainder.

31
 Decarbonization technologies

Six main decarbonization technologies would account for more than ~90% of 2050 abatement
(Exhibit 6): improving the energy and resource efficiency of equipment and processes to
reduce fuel needs and process emissions; replacing fossil fuels through electrification and
renewables (solar and wind energy); replacing internal combustion engines with battery
electric technologies (passenger cars, buses, trucks); replacing fossil fuels with sustainable
(green) hydrogen and its derivatives in industry and transport; decarbonizing industrial and/
or power processes by capturing and storing carbon; and adopting negative-emission
solutions through breakthrough decarbonization technologies and natural negative emissions
(e.g., DAC of carbon with storage in depleted reservoirs or planting mangrove trees to
absorb atmospheric carbon).

“Green electrification”, based on electrification, renewables and battery electric technologies,

would account for 50-60% of decarbonization and would therefore drive the 2030-40
abatement. Carbon capture and storage is needed for 5-25% and can be a viable option
within the decade for select industrial point sources. Domestic hydrogen would account for
5-10% of decarbonization and could provide a sizeable export opportunity.

To enable these decarbonization technologies, four conditions would need to be in place.

32
Exhibit 6: Decarbonization technologies

Most of the abatement is driven by electrification &

renewables, and battery electric technologies
Abatement percentage vs. BAU in an Orderly Transition pathway, 2050 ​

0% 0-5% 5-15% 15-25%

Oil and Trans- Total

Category Industry Power1 gas port Other abatement

Energy and
resource 6%
efficiency

Electrification
and 35%
renewables

Battery
electric 20%
technologies

Sustainable
8%
hydrogen​

Carbon
capture and 15%
storage

Negative-
emission 7%
solutions2 ​

Other
9%
solutions3

100%

1. Incl. all electricity consumption in buildings

2. Incl. forestation, advanced carbon capture and storage or utilization
3. Incl. f-gases decarbonization and waste reduction

33
 First, technology would have to mature. The levelized cost of electricity for solar and wind
would have to fall by 30% and 20% respectively, and electric and hydrogen fuel cell vehicles
would have to compete in price with ICE options. If sustainable hydrogen is to scale, costs
would need to fall to ~USD 2-3/kg.

Second, the new technologies would require major infrastructure. For example, grid extension
to 50% of downstream oil and gas facilities, a charging network for electric vehicles and
carbon capture and storage infrastructure for industrial (energy) players.

Third, legislation and policies would need to incentivize behavior changes (e.g., switch from
ICE to electric vehicles), enable green products or production routes (e.g., grid regulation to
facilitate new grid connections) and encourage private investors and developers to invest.

Finally, market mechanisms such as domestic and international carbon-pricing may be needed
to incentivize the scale-up of more costly decarbonization technologies, notably carbon
capture and storage.

Oman’s pathway aspiration is bold. The Carbon Management Lab has already identified
ongoing and planned projects that are estimated to contribute ~50% of Oman’s expected
abatement by 2030, largely through energy efficiency measures and green electrification
(Exhibit 7).

34
Exhibit 7: Oman 2040 Vision Lab project pipeline

~50% of total projected abatement in pathway Approved projects Expected projects

by 2030 (~13 Mt CO2e abatement1)
Enablers in place:
Few Multiple Most All

Key abatement Enabling

initiatives initiatives

Energy and Reduce routine gas flaring, Energy efficiency

resource energy efficiency in O&G law in industry and 73%
3,5 Mt
efficiency and ISO5001, efficiency building regulation &
CO2e
measures and feedstock requirements
change in industry

Electrification
& renewables
Clean energy projects in Oil
& Gas, electrification, biogas
Reducing high-cost
green energy
94%
8.8 Mt
and waste-to-energy in generation initiative CO2e
industry and solar and wind
capacity in power sector

Battery Not applicable as lever is Regulations and

N/A
2

electric more about adoption, not incentives to support 0 Mt

technologies projects the usage of BEVs CO2e

Sustainable Blue hydrogen project, incl. Educational center

hydrogen ammonia for export and for alternative fuel, 14%
0.2 Mt
FCEV buses incl. hydrogen and
CO2e
study use of green
H2 in industry

Carbon
capture and
N/A, Potential CC(U)S
projects (blue hydrogen,
CC(U)S structure
set up potentially
0%
0 Mt
storage decarbonization aluminum) included in GHG
CO2e
are captured under other emission reduction
levers to avoid double scope 1 & 2 project
counting

Negative-
emission
Afforestation and cultivation
initiatives across industry, Oil
Sustainable city
initiative supports
19%
0.4 Mt
solutions & Gas, building and biofuels carbon deductive CO2e
in transport activities, excl. DAC,
BECCS projects

1. Excl. other initiatives ~0.3 Mt CO2e of out-of-scope industries, like glass recycling
2. Initiatives centered around enablers, with abatement expected to be naturally driven by uptake

Source: Oman’s Carbon Management Lab

35
 3. Broader impact of
an orderly transition
for Oman

36
The net zero pathway to 2050 would entail ~USD 190 billion in additional capital investment
relative to Oman’s business-as-usual scenario (~15% net of opex savings). The big-ticket
items would mainly be in power and hydrogen infrastructure, e.g., to upgrade and extend the
electricity grid, build out hydrogen pipelines and storage, build an electric vehicle charging
infrastructure and deploy long duration energy storage at scale.

If we include the investment needed to unlock the hydrogen export economy, the investment
required would increase by a further ~USD 230 billion (60-65% additional capex vs business
as usual). These incremental expenditures are not expected to be financed fully by the
Government; public estimates suggest that the private sector could finance 70- 80% of the
global energy transition by 20506.

This investment would also support Oman on its broader objectives

Energy system costs. The pathway would affect sectors differently (Exhibit 8). For example,
in transport it could reduce the total cost of vehicle ownership by ~20-25% by 2050 (even
with the required charging infrastructure). In power, the transition to solar and onshore wind
could halve generation costs per kWh (upfront infrastructure costs are expected to be
recovered by approximately two-thirds of the aggregate cost savings through 2050). However,
in industry it could increase the levelized cost of steel production by 10-15% (which could be
offset by a green steel premium in the short term).

Economic impact. An orderly transition could contribute an additional 50% to GDP by 2050
(vs 2021), two-thirds of which would come from domestic investment in hydrogen (including
export infrastructure) and the rest from expanded green power capacity.

Electrifying the economy could free up a large amount of gas, creating a compelling opportunity
for Oman to capture a “fuel double play”. An estimated 1.5 MTPA (rising to 4.0 MPTA by 2050)
of excess gas could be directed to a mix of additional LNG and blue hydrogen exports.
Developing the blue hydrogen infrastructure could pave the way for up to 8 MPTA of green
hydrogen exports by 2050.

Social impact. Together with new green business growth opportunities, an orderly transition
could increase total employment in Oman by 20-30%, mainly in the power sector (~43% of
total new direct jobs) and the emerging hydrogen economy (~57% of total new direct jobs,
in domestic and export markets). Omani citizens could be upskilled and reskilled – e.g., in
the technical expertise needed for clean technologies like hydrogen, electric vehicles and
carbon capture and storage – to supply trained workers to fill these jobs.

6 IEA, IRENA

37
 Oman’s economy will benefit from new GDP contributors,
reduced household costs and job gains in certain sectors

Additional required New employment New GDP

investments opportunities contributors

~15% ~40%+ 60%+

addional Capex in power by 2050 from the hydrogen
economy
is required at a system-
~55%+
level for a Net-Zero transition
(net of Opex savings)
in H2 by 2050 30%+
from green power
Share of newly created
~20% direct jobs
capacity expansion
recovered Opex Driven primarily by a new
by 2050 Jobs to redeploy with hydrogen export sector
up- and reskilling needs and an increased power
20% of 2021-50 Capex
(i.e., technical expertise for sector, incl. electricity grid,
could be recuperated
clean techs like CC(U)S, and renewable energy
through Opex savings
hydrogen, and EVs) generation

Energy system costs to end-users Future security of

supply
Adoption of decarbonization technologies leads to: Self-sufficiency in supplying
domestic demand for
~2% ~15% power and hydrogen in
in 2030 in 2030 2050 and hydrocarbons
in the transition phase.
20-25% ~50% Increased dependency
in 2050 in 2050 on several imported
Decrease in total costs Costs reduction of clean technologies and
of ownership of cars1 power generation2 materials (e.g., batteries,
EVs, rare-earth metals)

1. Weighted average of the total costs of ownership of the total vehicles fleet vs. BAU, including additional Capex (e.g., EV charging
infrastructure) only in 2050 when the total system costs allows for a decrease >5% thus able to absorb the increase in capex
2. Weighted average of the LCOE of the energy mix in 2030 and 2050 vs. BAU. Excluding additional Capex required for energy storage
(e.g., LDES) and system balancing

38
Security of supply. By 2050, Oman could become self-sufficient in power and hydrogen,
using hydrocarbons during the transition. The execution risk is low as most decarbonization
technologies are already proven and Oman has high solar radiation, adequate wind speed
densities and aquifers for carbon storage. However, other risks would need to be managed.
An orderly transition implies greater dependency on some imported clean technologies and
materials, e.g., the supply of batteries and electrolyzers must be secured and the grid will
need to be built out to support large-scale electrification of the economy.

Exhibit 8: Energy system cost implications

Selected examples across the priority sectors

Transport Buildings Industry Power Oil & Gas

~20-25% <15-year 10-15% ~50% lower ~15% of

average reduction
in cost of owning a
payback levelized cost
increase in
generation costs
per kWh by 2050
abatement driven
by levers “in the
car by 2050 time transition to green
hydrogen in 20302
due to transition to
solar PV and
money”
Infrastructure needs of active retrofits of Next ~45% requires
onshore wind
for electric vehicles1
likely covered by
residential buildings,
including improved
Breaking Projected upfront
carbon price of up
to 50 USD/t CO2e,
this reduced cost of
car ownership
insulation and solar
panels
even requires infrastructure invest-
ments recovered
and the last 20-40%
up to 100-220
margin reduction
by 2/3rd of USD/t CO2e
in the long-run
expected savings
or capturing (short-
in generation
lived) green
through 20503
steel premium of
50-100 USD/t

1. Assuming cumulative EV charging infrastructure investments of 10.8 bn USD by 2050, spread over 30 years and 2.4
mn EVs; implying a 0.007 USD/km cost increase, which translates to a 3.7% increase in total cost of ownership for EVs
2. Assuming: Steel-price of 800 USD/t, NG DRI EAF opex of 431 USD/t and capex of 650 USD/t, H2 DRI EAF opex of 472
USD/t and capex of 850 USD/t, NG price: 4.76 USD/mmbtu, H2 price: 2.11 USD/kg H2, lifetime: 30 years
3. Infrastructure investments including Long-Duration Energy Storage and grid capacity expansion

39
 4. The way forward

40
Oman is at the beginning of a longer journey to net zero emissions by 2050. Laying the right
groundwork over the next 24 months is critical to its success (Exhibit 9). This would include:

� Continuing to build credible momentum. Balance longer-term planning with near-

term delivery by deciding which priority levers to implement first to unlock their full potential,
capture immediate value and remove future bottlenecks.

� Organizing for success. Develop an integrated approach with clear ownership supported
by the Oman Sustainability Center whose role would be to set up (and execute on)
governance, track progress, ensure alignment across initiatives and develop a financing
plan with the Ministry of Finance.

� Establishing regular and structured communication. Ensure all stakeholders know

and understand the actions to be taken, where decisions need to be made, and how
decarbonization initiatives are interdependent across sectors.

� Aligning policies, legislation and regulation. Translate national targets into sub- and
cross-sectoral policies to change behavior on the ground and develop end-to-end climate
law to close legislative and regulatory gaps.

Exhibit 9: Next steps and the way forward

Completed
OCT MAY NOV
Target set to achieve Detailed First FID
Net Zero by 2050 implementation taken on
plan at sectoral priority levers
Establishment of
level, including
Oman Sustainability
quick wins and
Center
owners COP 28 COP 29
2023 2024

NOV
OCT JUN
Defined detailed Detailed implementation First decision-
pathway and plan for new value making on
vision chains, including priority system choices
levers and key unlocks with first FIDs

Source: Oman’s Carbon Management Lab

Oman’s vision for a cleaner, greener future is as compelling as it is challenging. But the oppor-
tunities presented by the energy transition are transformative and hold the promise for a
bright and sustainable future for all Omanis. With the guidance of Almighty Allah, Oman will
move forward boldly to stake its position as a leader in the energy landscape of the future.

41