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Morocco announces its measures to adapt to the EU carbon tax

The Minister of Industry and Trade, Ryad Mezzour, has indicated some of the responses that Rabat plans to take to adapt to the European Union's carbon tax
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PHOTO/ARCHIVO  -   Ryad Mezzour, Minister of Industry of Morocco

Speaking at the "Regional Investments" tour, organised by the People's Bank of Morocco, Ryad Mezzour outlined the general lines of the Moroccan government to prevent its exporters from being heavily affected by this new tax, agreed by the Council of the European Union on 15 March, but whose specific details have not yet been adopted. 

"We are looking forward to it because we are finally going to understand precisely how this mechanism will work. There are six options on the table and within the six options the tax can go from one to a hundred times the barriers decided," the minister said.

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PHOTO/ETIENNE ANSOTTE -  President of the European Commission Ursula von der Leyen

The Border Carbon Adjustment Mechanism (BCA) is an environmental measure planned by the EU that aims to prevent carbon leakage to third countries. To this end, Brussels seeks to tax imports of carbon-intensive products, preventing the EU's domestic environmental efforts from being offset by trade with third countries with less ambitious climate policies. 

In addition, this measure also seeks to extend the green transition abroad. "It will encourage other countries to pursue greater sustainability and reduce their emissions," said Bruno Le Maire, France's Minister of Economy, Finance and Recovery, at the time.

Under the Council's proposal, from 1 January 2023, exporters from third countries will have to declare the emissions embedded in their goods, although they will not have to pay this tax for a transitional period until the end of 2025.

From 2026, the definitive system will come into force, which, in principle, will target 5 carbon-intensive products: cement, electricity, fertilisers, iron and steel. However, many details are still up in the air, such as the level of the tax rate, which will have to be finalised with the European Commission and Parliament. 

The EU is Morocco's main trading partner. In 2019, up to 64% of Rabat's exports went to the bloc, so any European levy on this trade could have a strong economic impact on the Arab country. 

But Mezzour is confident that the impact will be limited. "In general, Morocco is well prepared. The Kingdom is one of the few countries that are on the trajectory of the Paris Agreement," he said. 

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PHOTO/REUTERS - Noor II solar-thermal power plant in Ouarzazate

The key would be to allow Moroccan export industries to access renewable energies in order to reduce their carbon footprint. "Access to high voltage electricity is working well. Access to medium voltage has taken time, but we are in the final stages of validating the processes and allowing industry in general and throughout the territory to access it," Mezzour said.

Regarding the target price for this electricity, Mezzour set the target at 50 dirham cents per kilowatt-hour (about 5 euro cents). "We will be at 50 cts/kWh with a certification of 90 per cent from renewable sources recognised abroad," the minister promised.

Rabat would also point to other measures to complement these efforts. "We are moving forward in the framework of the circular economy with projects on metals, household waste, industrial waste, textiles... in order to have recycled fibre and a circular economy that meets the needs, first and foremost, of customers, who are increasingly demanding in these areas," Mezzour announced.

And in order to prepare the industry for the new European requirements, the Moroccan politician also revealed that Rabat is in the process of setting up its own carbon market. "We are working on the certification of the carbon footprint of our products and our companies, which will lead to a national carbon market that will allow us to be in line with the requirements of our main customers in Europe," the minister added.

"On 1 January 2023, everything will be in place," the Moroccan politician assured, stressing that the country will be adapting according to the specific details of the tax to be determined by Brussels. "We will adjust according to the mechanism chosen so that, on 1 January 2026, we will not have to suffer too much with this tax. And if there are still adjustments to be made in 2026, we have other means of ensuring compensation, in particular through our major afforestation programmes that will allow our industrialists to pass through the filter of the mechanism without any problem," Mezzour concluded.