An unprecedented threat to humanity, the climate crisis has been escalating for decades, looming over the environment, the global economy, as well as international peace and stability. Located inNorthwest Africa, Morocco is among the most vulnerable countries to climate change, although it contributes very little to it. Without significant hydrocarbon resources but with substantial endowments of renewable energy, Morocco has made the energy transition a national priority as to lead the fight against climate change and engage the country in a sustainable development trajectory.
Main achievements of the Moroccan energy transition
Morocco has played a key role in the development of renewable energy. Its energy industry, which accounts for about 26% of its greenhouse gas emissions, has undergone significant transformations in recent years. Due to these successful transformations, Morocco is now recognized as one of the pioneers of the energy transition in Africa.
Over the past twenty years, wind and solar energy have gained ground and momentum in Morocco. The share of renewable energy, including hydro electricity generation, rose from 6% in 2000 to 19% in 2020, a percentage similar to that of France and Tunisia but lower than Spain and Portugal. Furthermore, Morocco accounted for approximately half of North Africa's electricity generation including wind, solar PV, and solar thermal in 2019.
Furthermore, Morocco has also significantly advanced towards reaching its target of 42% of installed renewable energy capacity by 2020. The actual installed capacity in the same year was estimated at 37%. It constituted respectable progress for a developing country which occurred despite a challenging external environment exacerbated by the COVID-19 pandemic, technical or technological constraints, and several institutional obstacles.
Morocco's significant achievements in the energy transition have been supported by concerted government strategies and policies. Its energy sector transformation began in 2009 with the National Energy Strategy, which aimed to strengthen its power supply security by diversifying its energy mix. This strategy served as the basis for an articulated package of policies to address climate change and promote further the transition.
The country has further worked to provide the legal and regulatory frameworks necessary for deploying its broader transition strategy, focusing on market creation. New legislations have been passed which have allowed tenders and auctions for large-scale solar and wind projects to take place, thus encouraging private investment in the sector. Other success factors have included fostering investor and lender confidence by creating competent one-stop agencies, such as the Moroccan Agency for Sustainable Development (MASEN).
The latter is in charge of piloting renewable energy in Morocco, including the Noor Complex project, considered as one of the largest Concentrated Solar Power (CSP) plants in the world. MASEN has thus far developed its projects under a long-term public-private partnership (PPP) scheme based on the independent power producer (IPP) model. Their financing scheme is traditionally based on the mobilization of concessional funds, often contracted with international financial institutions, and retroceded to the project companies, owned in majority by the winning bidder of the project.
Moreover, Morocco also undertook a wide-ranging reform on energy subsidies. Subsidies on gasoline and fuel oil and diesel were eliminated entirely in 2014 and 2015. Thus, significant fiscal space has been freed up so that investments can be redirected to renewable energy sources. However, subsidies on liquefied petroleum gas (butane gas) are being maintained for social reasons to avoid a disproportionate burden on the poor.
The main challenges for the Moroccan energy sector
In 2020, Morocco conducted a diagnostic of its economic model to identify growth levers that could contribute to stimulating resilient and sustainable growth. Among the conclusions found was the urgency of overcoming some remaining challenges facing the Moroccan energy sector, in order to accelerate the energy transition.
In the electricity sector, the main challenge is that Morocco must phase out coal use, which still dominates production despite the increase of renewable energy. In 2020, nearly 68% of electricity was generated by coal, mainly imported, while renewable energy, including hydro, represented 19% of the whole electricity production.
Phasing out coal and increasing variable renewable energy sources – mainly solar and wind – creates new challenges for renewable energy deployment. The switch to renewable energies coupled with their intermittent nature, calls for ensuring grid stability, which requires adjustments provided by various storage technologies, perhaps quite costly.
Additional limitations to the development of renewable energy in Morocco can be overcome by improving the institutional and regulatory frameworks. While having made much progress, the institutional environment governing the energy sector still needs to be strengthened to further accelerate the transition and attract investors. Some factors are likely to play an important role, such as completing the liberalization of the renewable electricity generation market, operationalizing the National Electricity Regulatory Authority rapidly -which is ongoing,while also ensuring an effective coordination between the different energy sectorial actors in order to guarantee rigorous monitoring of the implementation of the transition.
In addition, the energy transition will have to go beyond the electricity sector to encompass other parts of the economy. A recent study on the decarbonization pathway of Morocco, indicated that significant and efficient public spending will be required to support the financial measures to decarbonize the Moroccan economy. The same study estimated that the required public spending would be up to USD 198 billion over the 2020-2050 period in their most ambitious scenario. This calls for an attractive policy framework to encourage private investments and to stress the importance of the private-public partnership model as an enabler to scale up investments.
Above all, the energy transition must be socio-economically based in order to leave no one behind. In this sense, Morocco must integrate the aspect of social equity in its transition in terms of jobs, access, stranded assets, etc.
The path forward
Building on its achievements in energy transition, Morocco is determined to give new impetus to the latter and thus play a vital role in the fight against climate change in Africa. The country has therefore submitted its revised Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change in June 2021. In its new NDC, the country has increased its emissions reduction targets to 45.5%, moving forward from the business-as-usual scenario by 2030 fixed at 42%, also by including an unconditional reduction target of 18.3% instead of 17%.
Therefore, a rapid energy transition has the potential to make Morocco a benchmark country in decarbonized energy production, as such expanding its export opportunities to promising neighboring markets. In addition, new clean technologies have shown a great potential in recent years including green hydrogen, in which Morocco aims to become a world producing leader. While encouraging prospects exist in Morocco and ambitious roadmaps are being developed, technical limitations (conversion, transport, storage, loss of ecological value) need to be overcome before Morocco will be able to export green hydrogen.
As North Africa is an important transit corridor between Europe, Africa, and the Middle East, the energy transformation is also an opportunity to strengthen collaboration with other regional countries so as to accelerate the energy transition in the area. While interesting examples can be found in Egypt and Tunisia, capitalizing on each country's progress and working together offers the opportunity to further propel the energy transition in North Africa and to generate significant socio-economic benefits.
At the same time, the region needs to adopt a common position to take advantage of new considerations emerging in the neighboring North Mediterranean region. This could include the European Green Deal, which will have a significant impact on the countries of this area, given the historical and economic ties. Therefore, Morocco and North Africa should get prepared to explore the numerous positive potentials while ensuring the fairness in the energy transition for their populations.