This article originally appeared in the World Economic Forum.

Global energy demand is projected to swell nearly 50% by 2050, reaching 250 petawatt hours. At the same time, the world is striving to lower emissions in line with the Paris Agreement. To limit global warming to 1.5 degrees Celsius above the pre-industrial average, the world needs to rapidly decarbonize by the end of this decade. In the Middle East and North Africa (MENA), the pursuit of sustainability transcends environmental necessity or their decarbonization pledges per the Paris agreement. Global decarbonization efforts can unlock vast strategic opportunities and position MENA at the center of a burgeoning clean energy economy.

Conventional hydrocarbons are expected to continue playing an important role in the future energy mix. Even the most ambitious net-zero scenarios expect oil and gas to provide 15%–40% of the global energy mix in 2050. The International Energy Association estimates the 2050 oil demand to be around 50–90 million barrels per day in their Announced Pledges Scenario and Stated Policies Scenario.

The MENA region, and especially the Gulf Cooperation Council (GCC), is an optimal basin for hydrocarbon production. The region holds around 50% of global oil reserves and can extract oil efficiently at a cost of $7–$15 per barrel of production. Emissions are roughly 40kg of CO2 emissions per barrel, which is 33% lower than the global average. Relatively low emissions and economics will keep MENA as the last oil and gas supplier in the global energy mix. Oil and gas, in conjunction with carbon capture, will also be necessary to make products for the energy transition and to manage intermittency in renewable sources as we strive towards net zero.

MENA’s natural advantages

At the same time, MENA could aggressively pursue renewable technologies, which by 2050 could supply up to 40% of the world’s energy. The region has superior access to renewable energy sources: It receives about a quarter of the world’s solar energy, and about 75% of MENA experiences winds strong enough for utility-scale wind farms. The region also has large swathes of available land for renewable projects.

Over the last two decades, experience and scale advantages have significantly lowered the cost of renewable energy production. In MENA, solar power production costs one-fifth the global average, according to the International Renewable Energy Agency. For instance, the 600-megawatt Al Shuaiba solar-power project in Saudi Arabia received the lowest levelized cost of electricity bid at $0.0104 per kilowatt hour.

With an abundance of low-cost renewable energy solutions, MENA has the potential to produce green hydrogen competitively and supply key demand centers in Europe and east Asia. The region also has favorable geological locations for carbon capture, utilization, and storage (CCUS), and could store 170 billion tons of CO2 according to Global CCS Institute; among the highest storage capacities in the world.

Harvesting new business opportunities

With support from Bain & Company, the World Economic Forum convened a coalition of major government and corporate stakeholders to accelerate corporate-led sustainability action in the MENA region. The coalition, called Leaders for a Sustainable MENA (LSM), represents the first movers from the region, who recognize the opportunity stemming from the global clean energy transition. Members recognize that sustainability action could enable MENA countries to reduce their own domestic emissions, as well as continue playing a pivotal role in global energy flows, albeit with an evolved energy product portfolio.

Transformative groundwork is already underway. For instance, Saudi Arabia is building a world-scale green hydrogen plant in Neom, and Saudi Basic Industries Corporation and Saudi Aramco have started to ship blue ammonia to South Korea and Japan. Furthermore, 14 CCUS projects are either operational or in various stages of development in the GCC region, with the combined potential to capture around 20 million tons of CO2 per year. This progress to date represents only a fraction of the vast potential that MENA holds in the global energy transition.

MENA’s strategic advantages

MENA has three strategic enablers that help differentiate it: access to capital/financing, existing physical and soft infrastructure for energy exports, and decisive leadership.

Access to low-cost capital/financing

Energy-exporting Gulf countries are home to some of the world’s largest sovereign wealth funds (SWFs). SWFs carry a transgenerational view of risk and returns, which allows them to deploy capital toward nascent low-carbon pathways. Unlike private equity firms or corporate investors, SWFs are not under pressure to deliver fast returns to their investors. Several are actively investing in low-carbon technologies.

Existing infrastructure

With a long history of being a trusted and reliable energy supplier, MENA already has world-class infrastructure in place to trade energy products globally: ports, pipelines, and roadways; commercial partnerships; and legal and contractual structures.

Supportive leadership

MENA’s leadership structure de-risks complex, mega-scale, and risky projects. The political direction and on-the-ground execution are heavily in sync, which enables decisive and nimble action. Mega-scale projects can move swiftly through agile governance systems.

How to unleash MENA’s potential

We worked with members from the Leaders for a Sustainable MENA coalition to understand what’s inhibiting the region’s energy transition. Members cited four key challenges: the nascency of the market; the absence of clear policy frameworks; inadequate access to financing and technology; and insufficiently trained human capital.

Based on their input, we identified five tools to unleash MENA’s potential:

1. Market access. MENA needs clear policies on long-term purchasing agreements for clean energy, both domestically and abroad, and greater awareness among users. Governments can also make offtake commitments to help nascent technologies take hold and to nurture the market for low-carbon technologies.
2. Harmonized standards. MENA needs common definitions, standards, and certifications to measure its energy ambition and its progress. Beyond regional harmonization, MENA must collaborate with international partners, so it can be prepared to lead and operate on the global stage.
3. Technology and infrastructure. To deploy these projects, companies need access to critical infrastructure (including grid, pipelines, ports), plus faster administrative processes (e.g., land permits).
4. Financial incentives. Policymakers could decrease the cost of low-carbon technologies through direct grants and tax credits and by providing low-cost financing for projects. They can also support consumer adoption through targeted end-user incentives.
5. Green capabilities. Policymakers can help bridge the critical skills gap and train the workforce for green jobs. Industry partnerships and educational curricula could align with the future of energy—and corresponding economic opportunities. R&D partnerships among governments, educational institutions, and the private sector can also spread the cost and accelerate innovation.

Seizing this opportunity requires a bold fusion of vision and pragmatism. As visionaries, policymakers and business leaders must imagine new ways to invest capital, develop technology, and coordinate and cultivate talent. Pragmatically, MENA could deploy capital efficiently toward low-cost and low-emission energy solutions, which the world needs to meet its growing needs, as it transitions to net zero.

Every nation deserves the opportunity to flourish economically. Access to clean and cost-effective energy sources is necessary for a sustainable and prosperous future. MENA can take on the responsibility to provide reliable, clean, and affordable energy to power the world towards the future. If MENA leads these efforts, it can decarbonize wider regions of our planet and stake a claim in the new energy economy.