Background

In December 2019, the European Commission adopted its landmark European Green Deal. The goal is to reach climate neutrality by 2050, and to turn the transition into an economic and industrial opportunity for Europe. An agreement was also recently reached on the European climate law which turns the EU’s commitment to reduce its net Greenhouse Gas Emissions (GHG) emissions by at least 55% by 2030 (compared to 1990 levels) into a legal obligation under the “Fit for 55” package unveiled on July 14th, 2021. In addition to GHG abatement goals, this package includes a proposal for its long-discussed carbon policy measure, the EU Carbon Border Adjustment Mechanism (EU CBAM), meant to avoid carbon leakage and encourage EU trading partners to accelerate their decarbonization strategies. Another important and explicit goal of the European Green Deal is to strengthen the EU’s global leadership. One of the ways it seeks to do this is by establishing environment, energy, and climate partnerships with the states of the EU’s southern neighborhood, including Maghreb countries. The EU can achieve this by pursuing key policy actions that could collectively be embedded under ‘Green Deal diplomacy’.

Welcoming Remarks

Antonio Villafranca, Director of Studies, ISPI

Panel Discussion

Amine Bennis, International Legal Counsel; Former Visiting Fellow, ECFR

Rim Berahab, Senior Economist, Policy Center for the New South

Ayman Cherkaoui, Coordinator and Head of Strategic Development, Mohammed VI Foundation for Environmental Protection

Larabi Jaïdi, Senior Fellow, Policy Center for the New South

Slim Othmani, President, Maghreb Economic Forum (MEF), Enterprise Action and Reflection Center (CARE)

Ilaria Urbani, Project Manager, MENA Region, RES4Africa Foundation

Introduction

Antonio Villafranca: Today’s event is a part of a series of events organized in preparation of the 7th edition of the Rome MED conference which will take place from the 2nd to the 4th of December 2021 promoted by the ISPI and the Italian Minister of Foreign Affairs and International Cooperation.

The Rome MED aims to rethink traditional approaches to the area complementing analyses of current challenges with new ideas and suggestions and to draft a new “positive agenda”, addressing shared challenges at both the regional and the international level.

Launched in 2015, MED has quickly become the global hub for high–level dialogues on the broader Mediterranean engaging prominent leaders of Mediterranean governments, business, civil society, media, and academia.

Rome MED builds upon four pillars: Shared Prosperity, Shared Security, Migration, and Civil Society and Culture. Debates on these topics are intended to complement analyses of current challenges with new ideas and suggestions to scale-up economic cooperation, overcome regional rivalries and conflicts, and ensure that adequate incentives for sustainable development are set in motion.

One of the key issues of Rome MED will be; environment, green transition, energy transition which is the core of today’s webinar and in particular the link between EU Green Deal and the energy transition in Mena Region.

Uri Dadush: The “Fit for 55” initiative announced on July 14 aims to ensure that the EU is on track to achieve 55% greenhouse gas emission cut by 2030 from the level of 1990 and to achieve climate neutrality by 2050.

This represents a substantial acceleration of decarbonization from the previous target under the EU Green Deal over a couple of years ago. It is just a proposal by the commission still to be agreed in the European Parliament by the member States. The Fit for 55 initiative includes at 12 packages. These packages include; revising the emissions trading scheme of the European Union ( EU ETS ) which comprises:

  • A carbon border adjustment mechanism.
  • A revision of emissions regulations in EU States.
  • A revision taxation of energy.
  • A social climate fund.
  • Several special initiatives for many sectors such as road transport, aviation and maritime

To achieve the Paris Agreement, The United States and China would have to follow a similar path of that of the EU. In fact, every country in the world need to contribute in order to control the GHG and that includes the Maghreb countries.

The EU is the Maghreb’s most important economic partner and has very tight links to it going back to colonial times and way before.

The effects of the EU’s scheme will not work only through trade and investment among others, but also through the power of example.

Discussions

Amine Bennis: He has substantial experience of working on energy and infrastructure transactions and policy initiatives in the government and private sector. His geographic focus is the Mediterranean and Maghreb countries.

He started by recalling that his thoughts are inspired by a paper that he published earlier this year when he was visiting the European Council of Foreign Affairs[1].

One the explicit goals of the Green Deal is to strengthen the EU’s global leadership. And this by establishing environment, energy, and climate partnerships with countries of the EU southern neighborhoods and particularly those of the Maghreb region.

Therefore, he sees two main trends; the first one is the link between the EU Green Deal and economic development and migration. The EU GD can effectively offer solutions to create workforce opportunities in renewable energies which can contribute to economic development and mitigate migration flows.

The European development assistance for the development of the green energy sectors in Maghreb countries can provide a source of significant economic development and local employment. Not only European investors are involved, but also local developers, subcontractors, and workers.

The second main trend is the EU climate neutrality target and the hydrogen prospects from the Maghreb. Some EU States will need to import a large amount of green hydrogen to reach their carbon neutrality targets. Hydrogen can seasonally stored and transported cost-effectively over long distances using gas pipelines. The EU can actively pursue this potential for cooperation for green hydrogen with Maghreb countries a way to contribute to its 2050 carbon neutrality target.

In addition, there are various ways for the Europeans to use the GD to enhance cooperation with the Maghreb region and contribute to their reciprocal green transition. First by using financing sources or the EFSD + mechanism the European Fund for Sustainable Development-plus which is a new regulation and an integrated financial package that supplies financing capacity through grants, technical assistance, financial instruments, and budgetary guarantees.

So, the commission should incentivize companies willing to invest in renewables in the Maghreb by using this mechanism to bridge the funding gap of the energy transition.

In terms of policy dimensions, there’s a need to increase technical and capacity building assistance to some key energy stakeholders to facilitate the implementation of renewable projects.

Targeting the EU GD would also be an opportunity to create jobs, strengthen the resilience of fragile in the region.

All this requires a significant policy dialogue and transactional funding in a path that addresses common strategic interests such as development, migration, poverty reduction and local and inclusive employment.

Ilaria Urbani: she works to support Africa’s energy transition mainly covering Morocco, Tunisia, Egypt, and Algeria.

Res4africa works to create a favorable condition for scaling renewable investment in Africa, bring on board some members and partners from all over the world and are on the forefront of the green energy revolution. Its commitment is to work in Africa, for Africa and with Africans.

It aims to translate the world into actions through strategic programs and strategic initiatives. One of them is the Res4med which aims to support the renewable energy transformation in the southern and eastern Mediterranean countries, promote dialogue and partnership, conduct strategic analysis, and disseminate the knowledge in dedicated events.

The Maghreb is one of the regions they are focusing on. With its huge renewable potential, it’s evidence that it can still play a central role for the EU and support it to meet the growing demand of its growing population and fight against the climate change it’s suffering from.

Libya ad Algeria account the highest co2 emission resulting from oil and gas production, and with Egypt they account 12% of global oil and gas methane emission.

Maghreb countries can avoid up to 55% of methane emissions with no cost because the value of the captured methane will be greater than the cost of installing the abatement measures. So, it’s crucial from now on to accelerate the up-take in the RE investment.

For the rest of Africa, they started to investigate why only 0.5% of the world additional RE historic capacity occurred in the Med. The results of this study will be presented next year.

While analyzing the factors that affected the RE growth, they discovered that politics often interfere with regulatory progress and there’s a lack of secondary legislation, slow amendment process, lack of bankability of PPAs, the difficulty to obtain souverain guarantee and in some cases also to secure financing from a local bank. Regarding the business environment, there’s a general lack of transparency. The same thing with the tenders.

Following a survey done in 2016, which focused on Tunisia, Morocco, Egypt, and Jordan. Extended in 2021 to cover Libya, Algeria, and Lebanon, they discovered that overall risk level clearly shows the diversity of the region:

  • Morocco is a low risk perceived
  • Tunisia had made an important improvement in certain areas, but others require more politics effort.
  • Algeria and Libya are still perceived as a high risk, attracting RE investment still requires significant additional effort.

The public sector was also included in the survey in 2021. They discovered that the perceptions are not the same. The private sector stakeholders tend to see more risks than the public sector.

What can be done to boost the RE development in the region?

Four urgent solutions need to be implemented:

  • Foster energy mix diversification
  • Promote structural changes
  • Improve policy and regulatory framework
  • Improve energy cooperation

Rim Berahab: she works mainly on energy issues, but actually on a number of other development issues at the Policy center of the New South where she’s a Senior Economist.

As an economist and a researcher from the Maghreb, she can’t help but wonder about the implications of these ambitious packages like the EU GD on the region and particularly on Morocco. That’s why she decided to take a different outlook and bring attention to a specific mechanism introduced within the “Fit55” unveiled last July with a special focus on the carbon border adjustment mechanism to highlight the areas of concern and issues that the CBAM is likely to raise for developing countries including those of the Maghreb.

The CBAM aims to apply the same carbon tax to the import of high emitting and highly trade exposed sector as is applied to domestic producers in the EU. So far, five categories of products are covered by this tax which are electricity, iron and steel aluminum cement and fertilizers.  

  • 1st point of concern: Morocco is not a big exporter of these goods except for fertilizers but given that Morocco and the EU share strong economic ties. Morocco is still highly emission intensive particularly for heavy industries meaning that it produces more GHG emissions per unit of value added more than the EU which puts Morocco at risks.
  • 2nd point of concern: The negative implications that the EU likely to have on the global trading system. It’s true that the CBAM can technically be presented as WTO compliance. However, assuming that other countries opt for such systems, the structure of each national scheme will vary as with the many assumptions needed to calculate the appropriate tax in each case.

Therefore, carbon border tax whether based on EU ETS or other systems will vary not by country of destination and product but also by country of origin and firm and this is a practice that would significantly deviate from the WTO’s most favored nation principle.

  • The 3rd point of concern is that the CBAM might also be seen as inconsistent with the Paris Agreement itself because the proposed mechanism would penalize the least developing countries where the implicit carbon tax is below the EU price or where carbon intensity is higher. That’s why the CBAM is viewed as illegitimate by many developing countries and others.

In her opinion and despite being a well-intentioned effort to encourage decarbonization outside EU’s border, the EU CBAM introduces enormous complexities that risk fatally undermining the already fragile foundation of the world trading system and will also be strongly resisted by the developing countries that perceive it as inconsistent with the Paris Agreement.

Slim Othmani: who gave a business perspective from his think tanks that deal mainly on these issues in the Maghreb by answering this question:

  • How are the Maghreb countries progressing on their decarbonization plans?

Slim assumes that both Maghreb countries and EU should have the same priorities which in fact are not. All what had been presented in this webinar further proves his claims as almost everything made around the energy transition are one-side, and evidently for the EU.

Even if the Maghreb governments agreed to follow the global recommendations and sign the different international agreements on climate change, this can’t deny the fact we and the EU are not in the same boat. The Maghreb still has so many issues that Europe has already overcome. Issues that require good infrastructure, qualified human resources, know-how, and funding without compromise on the sovereignty of those countries. This means more political and diplomatic discussions in perspective with the EU.

The Desertec Project can be taken as an example. The political issues in Europe could jeopardize the development and the execution of such a transition plan in the region. The conflict between two European countries has aggravated an already unbalanced situation and has led to abandon this huge project which could supply Both North Africa and Europe with electricity.

Despite the importance of all these deals, mainly initiated by rich countries – and that require billions of dollars, our region still struggles to obtain enough water.  This should be the Maghreb’s priority before spending billions of dollars to make Europe greener.

Larabi Jaïdi: He’s an economist who focuses on international issues, social development, and Mediterranean studies and is a member of the royal commission on the new development model in Morocco. He’s a very active member who’s looked overall at the development strategy of Morocco which of course has to include these climate issues as well. 

He believes that the ambition to make Europe the first climate-neutral continent by 2050 cannot achieved by Europe on its own. The transformation of the EU economy will also depend on its partners’ effort including in its most immediate neighborhood such as the Maghreb.

The ambition of the EU GD in the Maghreb context is marked by the socio-economic consequences of the Covid-19 pandemic.

The debate is how to catch this opportunity to use this crisis towards a greener and a more circular model in Maghreb countries. Energy will be addressed as one of the pillars of this transition where interdependence between both shores of the Mediterranean demands coordination and collaborative solutions.

Regarding the Covid-19 recovery process, the Maghreb countries are in a context to turn this crisis into an opportunity for a green a circular transition which requires noting short than of a major structural transformation of economic models, domestically and globally.

Due to the social, political, and economic heterogeneity in the region, it’s obvious that one size fits all solution is not suitable. The Maghreb countries are far from mainstreaming green and sustainable development principles in their economies despite the progress in Morocco and Tunisia.

The Maghreb countries need to include domain-specific studies to propose recommendations on how to accelerate the green economy in this particular context.

The success of the EU GD is intertwined with a green transition is the economy and Maghreb and more largely the southern Mediterranean countries. In this regard, is the energy package of the EU GD relevant to promote future partnerships with these countries.

This package needs to complement the objective of securing the energy supply in EU with radical change in EU’s support to hydrocarbon production and marketing in southern and eastern Mediterranean countries.

In this context also, the renewed partnership proposes a new ambitious innovative agenda for the Maghreb countries.  This agenda incorporates new area of forms of corporation identified during the Covid-19 race crisis. It offers opportunities on strategic priorities for green and digital transition and is based on the conviction that sustainable prosperity and resilience can only be built on strong partnership.

The challenges that this renewed agenda may face is how to reinforce resilient economies in the Maghreb and how to build sustainable economies as it’s the question for almost all the Maghreb countries.

Ayman Cherkaoui: from the Mohamed IV Foundation for Environmental Protection. A foundation that has been working on these issues for many years.

The foundation activities focus on environmental awareness raising and capacity building. It has a series of activities that look at coastlines, air quality and evidently climate action.

The geographic scope of the foundation and its partners encompasses the entire Moroccan territory and beyond specifically Africa and Mediterranean Sea.

The interest of the foundation for climate action is not recent. The foundation was one of the first stakeholders in the Arab region and Africa to put in place greenhouse gas calculation tools based on a methodology from the EU but adapted and contextualized to Morocco.

As such, the foundation has more recently launched an effort in a facilitative manner in close partnership with leading stakeholders in the country including ministries and research institutes. This coalition of stakeholders will be working on how to further decarbonize the Moroccan economy.

One of its objectives is to update and adjust the greenhouse GHG emissions tool put in place a decade ago. Since ten a lot of progress has been made in the country. But at the same time there are areas of improvement whether it is in terms of the tool itself but also in terms of the actions that can be undertaken by the various partners, by the Moroccan economic stakeholders as a whole.

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