The Carbon Border Adjustment Mechanism (CBAM) of the European Union represents one of the components of a complex framework of policies and measures aimed at achieving the European objective of carbon neutrality by 2050.
A signed analysis By Veronika Ertl, Dr. Lahcen Haddad and Ayoub Touati, focuses, in particular, on the impact of CBAM on the Moroccan economy.
Response options for Morocco
In light of the potential impacts of CBAM on the Moroccan economy, several options to respond to the new mechanism have been suggested by experts and stakeholders.
One possible response is to adopt stricter climate policies to minimize the effects of CBAM on Moroccan exporters. The idea is to increase investment in renewable energy and energy-efficient technologies to reduce the carbon emissions embedded in export products.
In addition, consideration should be given to implementing its own carbon pricing mechanisms, using rigorous control and objective monitoring, easily recognized by EU partners as equivalent, which could help prevent additional taxes through the CBAM.
Morocco could also share with the EU its concerns regarding specific aspects of the CBAM and suggest adaptations that take into account the challenges faced by countries in the South. Experts highlight the concept of common but differentiated responsibility (CBDR), an important aspect in this context that should open the possibility of providing financial support to developing countries to invest in adaptation to CBAM.
Countries like Morocco could also negotiate an exemption or a reduced rate for Moroccan exports to the EU or, at least, a gradual adaptation that would allow more time than what is foreseen in the CBAM – as long as these adaptations do not threaten not the compatibility of the CBAM with the rules of the WTO.
Diplomatic efforts should be made to convince the EU to recognize Morocco’s advanced efforts to reduce its carbon emissions and to support the country’s transition to a low-carbon economy. In addition, Morocco could also negotiate bilateral agreements with the EU to promote trade in low-carbon products and services.
On the other hand, Morocco could diversify its export markets beyond the EU by increasing its exports to other regions, such as Africa, the Americas, the Middle East and Asia. A diversification policy would reduce Morocco’s dependence on the EU market and provide the country with the opportunity to promote its low-carbon products and services in new markets. Such a response, however, should not come at the expense of concerted efforts to reduce the carbon intensity of Moroccan industries.
Beyond general guidelines on how to respond to CBAM – and given the reality of CBAM coming into effect in October 2023 – this document also aims to provide concrete policy recommendations for Morocco on how to prepare. and adapt to the CBAM. Since CBAM should be seen as part of a larger package aimed at decarbonization, Moroccan policymakers should re-evaluate existing decarbonization strategies, particularly in sectors affected by CBAM, but also beyond. of the.
Existing strategies should be updated and recalibrated in view of the new challenges posed by the CBAM and an overall acceleration of decarbonization efforts, believe the authors who are respectively Director of KAS – REMENA, President of the Joint Parliamentary Commission Morocco- UE, and Project and communication manager at KAS – REMENA.
Develop and implement targeted policies to support sectors likely to be affected by CBAM: THE Policymakers in Morocco should consider the potential impact of CBAM on industries such as cement, steel and fertilizer production, which will be directly affected. As phosphate-related industries will go through a process of “greening”, policymakers should use the same model to develop and implement targeted policies to support other sectors, including measures to improve efficiency energy and reduce greenhouse gas emissions through the use of renewable energy sources. The necessary certification and monitoring systems should also be put in place and supported.
Develop a roadmap for the decarbonization of critical sectors: THE Policymakers should develop a comprehensive roadmap for decarbonizing crucial sectors, even if not directly impacted by CBAM, such as energy, agriculture, transport, extractive industries and others. The roadmap should include clear targets, timetables and specific policy measures to achieve these targets.
Strengthen the regulatory framework to support the decarbonization of key sectors: In order to enable an accelerated decarbonization process, policy makers should revise and strengthen the regulatory framework, in order to put in place incentives and provide legal certainty and visibility to companies. Aspects such as promoting the development of renewable energies, improving energy efficiency and implementing sustainable land use practices should be taken into account.
Promote capacity building efforts to support the transition to a low carbon economy: Policy makers should promote capacity building efforts to support the transition to a low carbon economy. The training and education of workers in key sectors, the promotion of research and development of new technologies and their adaptation to industries, as well as the improvement of certification, control and information systems to monitor progress accomplished are some of the initiatives that could be taken.
Foster innovative approaches to decarbonization: Besides more traditional measures, Moroccan policymakers should also explore innovative ideas for decarbonization, such as cooperation between industries and farmers to sequester CO2 and selling carbon credits, as well as creating the necessary regulatory frameworks for such innovative collaborations.
Leveraging the Renewable Energy Sector: Morocco has a strong position in the renewable energy sector, which can be harnessed to boost the country’s exports by reducing the carbon footprint of industrial production. Policy makers should therefore continue to encourage the development of renewable energy – both for domestic use and with the aim of transforming Morocco from a fossil fuel importer into a renewable energy exporter. They should also take the necessary measures (legislative, regulatory and technical) to enable all businesses to use renewable energy.
Investing in energy efficiency: The Moroccan government should step up its efforts to help companies improve their energy efficiency. Reducing the carbon footprint while remaining competitive (the business case for sustainability), and at the same time contributing to Morocco’s broader ambitions for energy efficiency and sustainable energy supply is a promising approach in that Sens.
Strengthen partnerships with the EU to accelerate decarbonization efforts: Policy makers in Morocco should engage with their EU counterparts to strengthen and deepen partnerships supporting the decarbonisation of the economy. This commitment could include the sharing of knowledge and best practices, the development of joint projects and initiatives, as well as financial support for energy efficiency measures. Another area in which EU financial support could help Morocco is the renovation of its energy infrastructure in order to minimize energy losses and to adapt the networks to electricity produced from renewable energies.
Use the CBAM as an opportunity for positive political communication around decarbonization: A holistic decarbonization effort in Morocco requires buy-in from all necessary stakeholders. This is why policy makers, in their communication around CBAM and decarbonization, should emphasize the commercial potential presented by CBAM and how it can help the Moroccan economy to accelerate its transition towards a low carbon economy.
The case for decarbonization needs to be backed by strong economic arguments. From a broader perspective, adaptation to CBAM can therefore be seen as supporting the country’s climate ambitions and international reputation, as well as the competitiveness of its economy. Given these potential benefits, progress on decarbonization should be presented as truly in Morocco’s interest, so that it remains a strong economic and political player on the world stage.