European Council on Foreign Relations
SUMMARY
- North African countries such as Morocco and Tunisia can help Europe meet its carbon emissions targets and strengthen its position in the face of fierce competition from China for economic and political influence.
- By encouraging European investment in renewable energy, the European Green Deal can increase local workforce opportunities, promote development, and stabilise migration, enhancing stability in the region.
- The EU should promote green hydrogen projects in Morocco and Tunisia. These would contribute to its climate neutrality goals and develop both European industrial leadership and local economies.
- The EU should also promote new electrical interconnections across the Mediterranean, to foster an integrated electricity market.
- Morocco and Tunisia should become official “Green Partners” of the EU. This would help catalyse joint action and ease those countries’ green transitions – especially that of Tunisia, which is particularly in need of help building additional capacity.
INTRODUCTION
The European Green Deal is the European Union’s roadmap to making the bloc climate neutral by 2050. It sets out how the EU plans to turn climate and environmental challenges into opportunities across all policy areas, and how it will ensure the green transition is just and inclusive for all. The Green Deal’s goals include cutting carbon emissions, making industry and transport sustainable, using green technology to boost the European economy, and decoupling economic growth from resource use.
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 neighbourhood. In that region, Morocco and Tunisia are two of the countries that have historically had the closest relations with EU member states; each country has already engaged, to a greater or a lesser extent, in the green transition, seeking investment in renewable energy.
This paper sets out the EU’s opportunities to increase its influence in its southern neighbourhood through the Green Deal. The EU can achieve this by pursuing key policy actions that could collectively be embedded under ‘Green Deal diplomacy’. The paper discusses the EU’s and its member states’ current relationship with Morocco and Tunisia on energy issues, and identifies opportunities for the EU to pursue its strategic interests and positively contribute to the green energy transition in Morocco and Tunisia. It concludes by making recommendations for how EU decision-makers can accelerate the development of the renewable energy sector in Morocco and Tunisia, and help the EU demonstrate global leadership via the Green Deal.
THE EUROPEAN GREEN DEAL AND THE EU’S SOUTHERN NEIGHBOURHOOD
The European Green Deal emerged from both the commitment the EU made to achieve carbon neutrality by 2050 and the current global effort to implement the Paris Agreement, whose core aim is to limit global warming to well below two degrees above pre-industrial levels. Ursula von der Leyen’s 2020 State of the Union address as president of the European Commission reinforced this commitment by increasing the EU’s 2030 carbon emissions reduction target from 40 per cent to 55 per cent.
Fulfilling this agenda will require multilateral action: the European Commission was clear when publishing the European Green Deal that Europe will not be able to achieve its goals by acting alone. The EU will need to use its influence, expertise, and financial resources to mobilise neighbours and partners in this shared endeavour. Such an approach is also in line with the EU Global Strategy and the European Neighbourhood Policy.
Broadly speaking, there are significant challenges and opportunities that the EU can respond to as part of its Green Deal diplomacy. This is the collective diplomatic effort of the EU and its member states to create ways for other countries to join in with EU decarbonisation policies and cooperation, thereby making progress towards reducing emissions – but, crucially, also helping draw partner countries away from competitor powers, such as China. Importantly, such efforts would complement those of EU member states as they seek climate neutrality; the new EU Hydrogen Strategy, for example, has an important international dimension that can benefit both North African countries and EU member states by increasing their use of hydrogen. Green Deal diplomacy can also help Europe promote its associated interests, generating economic development opportunities that would help it achieve its stabilisation goals, creating jobs in green industries, and potentially offsetting some of the ‘push’ factors in Tunisian and Moroccan irregular migration to Europe.
GREEN DEAL DIPLOMACY IN ACTION
The green opportunity in Morocco and Tunisia
Morocco and Tunisia present distinct opportunities for the EU in its quest for carbon neutrality. Both countries have significant potential in both solar and wind energy, and both have recognised this by adopting strategies to develop these sectors. And, unlike other North African states, neither has access to a huge quantity of hydrocarbon resources. Developing renewables facilities, therefore, helps them secure a greater degree of energy independence and gives them an asset in geopolitical relations that they have hitherto lacked. In addition, such progress is also in line with each country’s commitments under the Paris Agreement on climate change. Each has a reputation for being an attractive place to invest, offering promising returns for foreign direct investment (FDI) with fairly manageable risks. This includes Tunisia – although, since the Arab uprisings in 2011, governance issues have presented a new challenge to the country’s attractiveness. Nonetheless, ramping up the country’s involvement in renewable energy and importance to Europe in the area may help it address this challenge. Underpinning all this is Morocco’s and Tunisia’s strong historical and cultural relationship with European countries, which is probably stronger than that between Europe and other North African states.
While such connections matter – and Europe is certainly interested in how the region can help it achieve its energy and sovereignty goals – China presents an attractive alternative for these countries. China is currently engaging in fierce economic competition around the world, in the form of its Belt and Road Initiative and many other programmes and instruments besides. China is also becoming a leader in many areas of renewable energy, and it will be able to offer this expertise to North African countries at a good price. Here, Europe should acknowledge that North Africa is an area of strategic importance, a place in which being overtaken by China will not only harm its climate neutrality goals but will also stop it from locking in the political partnerships it needs to support political reforms and a democratic transition in the region.
In terms of the EU’s formal relationship with Morocco, the 2019 Association Council conclusions identified two key horizontal fields for action under the rubric of “Euro-Moroccan partnership for shared prosperity”. These entail cooperation on the environment and climate change, and on mobility and migration. The Association Council’s joint declaration notes the close relationship between the two fields, citing issues such as the importance of renewable energy, energy efficiency, biodiversity, and the sustainable use of natural resources.
In contrast, the 15th meeting of the EU-Tunisia Association Council held in Brussels in May 2019 did not have as strong a focus on renewable energy and sustainable development as its EU-Morocco counterpart. Instead, its conclusions concentrate on the importance of EU support for inclusive and sustainable development, and pursuing significant economic and structural reforms that support Tunisia’s democratic and other political achievements. Thus, in Tunisia, the economic challenges caused by the Arab uprisings and the dire economic consequences of the covid-19 pandemic are still placing enormous strain on public finances. This means that officials tend to focus on EU budgetary support for the country’s short-term needs rather than a green transition agenda with medium- to long-term targets. To this end, Tunisia was the second-largest beneficiary of a new EU macro-financial assistance package proposed in April 2020, receiving €600m. Direct support for green initiatives has been much more limited, partly because renewables facilities in the country are in the early stages of development.
Economic development and migration
The European Green Deal offers ways to create local workforce opportunities – which can, in turn, contribute to economic development and mitigate migration flows. Over the last decade, Morocco and Tunisia have faced challenges relating to migration as host and transit countries. The issue has aroused great concern within the EU – which has, at times, sought to work with North African countries to help them keep migrants from crossing the Mediterranean to Europe. Morocco has experienced a significant increase in the inflow of irregular migrants, mostly from sub-Saharan Africa, but also from Syria. Tunisia has, over the last few years, experienced increased unemployment and the resulting deterioration of young people’s prospects. Aggravated by recurring political instability, this has led to significant waves of irregular migration from Tunisia, mostly to Italy. Impacted by Libya’s governance and security issues, the Tunisian authorities are struggling to juggle this irregular migration, which increased from 2,700 in October 2017 to 4,000 in July 2018, with Tunisians the largest national grouping among migrants who crossed the Mediterranean to Italy, Greece, Spain, Cyprus, and Malta in 2020, according to the United Nations High Commissioner for Refugees
There is an economic link between Green Deal cooperation with the southern neighbourhood on one hand and EU migration policy on the other. This is especially true given that the European Commission has proposed a New Pact on Migrationand Asylum, and that the European Fund for Sustainable Development Plus (EFSD+) is also forthcoming in early 2021. The EFSD+ explicitly identifies increased support for economic opportunities and the need to address the root causes of irregular migration.
In this context, European assistance for the development of the green energy sector in Morocco and Tunisia could provide a source of significant economic development and local employment. Investment in renewable energy can directly create jobs, including through the recruitment of workers for wind farms and solar power plants, and for the construction and maintenance of such facilities. But it can also create jobs indirectly by, for instance, generating a new social and economic ecosystem. FDI can also help nascent local renewable energy industries grow by involving local developers, subcontractors, and workers. According to a study from the Mediterranean Forum of Institutes of Economic Sciences, Morocco’s renewable energy sector could generate between 267,000 and 482,000 jobs in the country by 2040. For Tunisia, the estimates are more modest: potentially 30,000 domestic jobs by 2030. Local authorities in each country can further strengthen local job prospects tied to this sector by applying “national content requirements”, which are measures that require investors to allocate a certain amount of investment to hiring local contractors, employing a quota of local workers, developing a local factory, or even partnering with a local investor.
A good example of such investment is the Siemens Gamesa factory in Tangier, which produces wind turbine blades for both the Moroccan and export markets. The large plant, which started production in April 2017, is strategically located in the industrial zone of Tanger Automotive City, close to Tanger-Med, one of Africa’s largest ports, and positioned between Europe and Africa. Siemens Gamesa is Europe’s largest wind farm developer and its Tangier investment contributed to the creation of 600 direct and an estimated 500 indirect jobs, as well as the opening of a training centre to facilitate knowledge transfer. Another example is a wind farm project located near the Moroccan city of Taza, which is due to be commissioned in 2021 and developed by a consortium of the French renewables leader EDF Renouvelables and Japanese contractor Mitsui, as part of an overall investment of €230m. In this case, the tendering process required the consortium to subcontract at least 30 per cent of the construction costs to Moroccan firms.
Such examples remain limited, however, and they required strong institutional engagement from the relevant state agencies and ministries, particularly the Moroccan Agency for Sustainable Energy (MASEN), the Moroccan investment agency, and the ministries of energy and industry.
Hydrogen and EU climate neutrality
The EU’s goal of climate neutrality by 2050 is a challenging one, particularly given that several member states will not be able to produce all the renewable energy they need to achieve. These states will, therefore, need to rely on the help of partners and allies. Beyond traditional investments in solar and wind power, a relatively new opportunity is attracting increased attention. In July 2020, the EU adopted a new strategy for energy system integration and a new EU strategy for hydrogen, a gas that can play a role in replacing fossil fuels because it contains no carbon. Some EU member states will need to import a large amount of green hydrogen – which is produced by electrolysis, a process that uses renewable sources of energy and thus has no direct carbon impact. Hydrogen can be seasonally stored and transported cost-effectively over long distances using gas pipelines.
In the short term, Morocco may be particularly well placed to send hydrogen to Europe due to its geographical proximity and its renewable energy facilities (Tunisia may be able to follow in this effort in the medium term, once it has established sufficient renewable energy facilities). Morocco is currently developing a hydrogen roadmap and devising several pilot projects. Morocco could produce hydrogen on a large scale very competitively because it has lower electricity production costs, higher electrolyser efficiencies, and cheaper capital expenditure.
Germany is a useful case study due to the progress it has already made in this area. Germany does not currently have enough renewable energy to produce all the climate-neutral liquid fuel and fuel gas needed to decarbonise its economy. However, obtaining green hydrogen and Power-to-X (PtX) products (the outputs produced by the green hydrogen industry) will help it do so. The German Federal Ministry for Economic Cooperation and Development (BMZ) has said that it views green hydrogen as an opportunity for partner countries, especially developing and emerging economies that have significant renewable energy sources. The BMZ believes this cooperation will enhance local value chains and economic diversification in those countries, and will contribute to energy security and inclusive job creation.
To this end, a German-Moroccan hydrogen partnership is already in place, and can serve as a precedent for extending such green hydrogen cooperation. Pilot projects for the production of green hydrogen are to be implemented in partner countries, and the BMZ is putting together “green hydrogen atlases” to show the potential for green hydrogen production in such countries and opportunities for sustainable development in Africa. Under the German National Hydrogen Strategy, in June 2020 the BMZ signed a memorandum of understanding with Morocco for the development of the PtX sector, focusing on two projects. The first is a new facility to produce green hydrogen and PtX products proposed by MASEN; this would be the first green hydrogen plant in Africa. The second is a research platform to allow for knowledge transfer and skills training in partnership with the Moroccan Research Institute for Solar Energy and New Energies.
In this context, the EU should actively pursue new opportunities for cooperation on green hydrogen with countries in its southern neighbourhood, as a way to contribute to its 2050 carbon neutrality target, Morocco’s and Tunisia’s own green energy transition, and the development of these countries’ local green hydrogen industry and associated research facilities and jobs.
