partnership for market readiness - the pmr maroc mrp_02... · 1.2 energy profile 15 1.3 historic...

اململكة املغربية

KINGDOM OF MOROCCO

Partnership for Market Readiness

Market Readiness Proposal for

Morocco

Version 5.2

May 2, 2014

Market Readiness Proposal MOROCCO

2

Proposal prepared by:

By: Noémie Klein, Alyssa Gilbert, Long Lam, Isabelle de Lovinfosse (Ecofys)

Mounir Temmam, Mounira Boussetta, Andalus Ben Driss (ECI)

Chris Peddie-Burch (SFW)


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Acronyms

ADA: Agence de Développement Agricole – Agricultural Development Agency

ADEREE: Agence de Développement des Energies Renouvelables et de l’Efficacité Energétique –

Agency for the Development of Renewable Energy and Energy Efficiency

AMDL: Agence Marocaine de Développement de la Logistique - Moroccan Agency for Logistics

Development

APC: Association Professionnelle des Cimentiers – Professional Association of Cement

Producers

A/R: Afforestation/Reforestation

BUR: Biennial Update Report

CCCC: Centre de Compétence du Changement Climatique – Competence Centre for Climate

Change (4C)

CERED: Centre d’Etudes et des Recherches Démographiques - Centre for Demographic Studies

and Research

CIC: Climate Innovation Centre

CNCC: Comité National des Changements Climatiques - National Climate Change Committee

CNEDD: Charte nationale de l’Environnement et du Développement Durable - National Charter

for Environment and Sustainable Development

CNST: Comité National Scientifique et Technique - National Scientific and Technical

Committee

CoP: Conference of the Parties

CO2: Carbon dioxide

CSI: Cement Sustainability Initiative

CSP: Concentrated Solar Power

DMN: Direction de la Météorologie Nationale - National Directorate of Meteorology

DPCC: Direction du Partenariat, de la Communication et de la Coopération – Directorate of

Partnership, Communication, and Cooperation

EC: European Commission

EU: European Union

EU ETS: European Union Emissions Trading System

FEC: Fonds d’Equipement Communal – Municipal Equipment Fund

FDE: Fonds de Développement Énergétique – Energy Development Fund

FFEM: Fonds Français pour l’Environnement Mondial – French Global Environmental Fund

FIRM: Facilitating Implementation and Readiness for Mitigation

FVA: Framework for Various Approaches

GDP: Gross Domestic Product

GEF: Global Environment Facility

GHG: Greenhouse Gas

GIZ: Deutsche Gesellshaft für Internationale Zusammenarbeit

GNR: Getting the Numbers Right

HCEF-LCD: Haut-Commissariat aux Eaux et Forêts et à la Lutte Contre la Désertification - High

Commission for Water and Forests and the Fight against Desertification

HCP: Haut-Commissariat au Plan - High Commission for Planning

IDB: Islamic Development Bank

INC: Initial National Communication

IPCC: Intergovernmental Panel on Climate Change

KP: Kyoto Protocol


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ktCO2: Kilotonnes of carbon dioxide

ktCO2e: Kilotonnes of carbon dioxide equivalent

ktoe: Kilotonnes of oil equivalent

LECB: Low Emission Capacity Building

LEDS: Low Emission Development Strategies

MAD : Moroccan Dirham

MAEC: Ministère des Affaires Étrangères et de la Coopération – Ministry of Foreign Affairs and

Cooperation

MAGG: Ministère des Affaires Générales et de la Gouvernance - Ministry of General Affairs and

Governance

MAPM: Ministère de l’Agriculture et de la Pêche Maritime - Ministry of Agriculture and Marine

Fisheries

MASEN: Moroccan Agency for Solar Energy

MBI: Market-Based Instrument

MdE: Ministère délégué auprès du Ministre de l’Énergie, des Mines, de l’Eau et de

l’Environnement, chargé de l’Environnement. Deputy ministry to the Minister of

Energy, Mining, Water, and Environment, in charge of the Environment

MCINET: Ministère de l’Industrie, du Commerce, de l’Investissement et de l’Economie

Numérique. Ministry of Industry, Commerce, Investment, and Digital Economy

MEDENER: Association méditerranéenne des agences nationales de maîtrise de l'énergie

Mediterranean Association of the National Agencies for Energy Conservation

MEF: Ministère de l’Economie et des Finances - Ministry of Economy and Finances

MEMEE: Ministère de l’Energie, Mines, Eau et Environnement - Ministry of Energy, Mining,

Water and Environment

MENA: Middle East and North Africa

MHPV: Ministère de l’Habitat et de la Politique de la Ville – Ministry of Housing and Urban

Policy

MI Ministère de l’intérieur - Ministry of the Interior

MRP: Market Readiness Proposal

MRV: Monitoring, Reporting, Verification – Suivi, Notification, Vérification

MT: Ministère délégué auprès du Ministre de l'Equipement, du Transport et de la

Logistique, chargé du Transport – Deputy Ministry to the Minister of Equipment,

Transportation, and Logistics, in charge of Transportation

Mt: Megatonne

MtCO2: Megatonne of carbon dioxide

MtCO2e : Megatonne of carbon dioxide equivalent

Mtoe: Megatonne of oil equivalent

MUATN: Ministère de l’Urbanisme et de l’Aménagement du Territoire National – Ministry of

Urban Planning and National Territory Planning

NAMAs: Nationally Appropriate Mitigation Actions

NAP: National Adaptation Plan

NMM: New Market-based Mechanism

OCP: Office Chérifien des Phosphates - National Phosphates Company

ONEE: Office Nationale de l’Electricité et de l’Eau potable / Branche électricité - National

Electricity and Drinking Water Office / Electricity Branch

PCCM: Politique du Changement Climatique au Maroc – Morocco’s Climate Change Policy

PERG: Programme d’Électrification Rurale Global – Global Rural Electrification Program

PGPE: Programme de Gestion et de Protection de l’Environnement - Program for

Environmental Management and Protection


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PMR: Partnership for Market Readiness

PMU: Project Management Unit

PMV: Plan Maroc Vert - Green Morocco Plan

PNDM: Programme National des Déchets Ménagers - National Solid Waste Programme

PNEI: Pacte National d’Emergence Industrielle - National Pact for Industrial Development

PNR: Plan National de Reboisement - National Reforestation Plan

PNRC: Plan National de lutte contre le Réchauffement Climatique - National Plan against

Global Warming

PoA: Programme of Activities

PV: Photovoltaic

RE: Renewable Energy

REDD: Reducing Emissions from Deforestation and Forest Degradation

RGPH: Recensement Général de la Population et de l’Habitat - General Population and

Housing Census

SBI: Subsidiary Body for Implementation

SBSTA: Subsidiary Body for Scientific and Technological Advice

SEEE: Secrétariat d’Etat chargé de l’Eau et de l’Environnement - State Secretariat in charge

of Water and the Environment (replaced in 2014 by the Deputy ministry to the

Minister of Energy, Mining, Water, and Environment, in charge of the Environment)

SIE: Société d’Investissements Énergétiques – Energy Investment Company

SI-GES: Système d’Information de l’inventaire des GES - GHG Inventory Information System

SNC: Second National Communication

SWH: Solar Water Heater

tCO2: Tonnes of carbon dioxide

tCO2e: Tonnes of carbon dioxide equivalent

TNC: Third National Communication

toe: Tonnes of oil equivalent

UNDP: United Nations Development Programme

UNEP: United Nations Environment Programme

UNFCCC: United Nations Framework Convention on Climate Change

3C: Consistent, credible, and compatible

4C: Competence Centre for Climate Change


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Table of contents

Background information 10

PMR Focal Point Morocco 10

MRP Preparation Team 10

Executive Summary 11

1 Country context 14

1.1 Economic background and trends 14

1.2 Energy profile 15

1.3 Historic and projected emissions trends 17

1.4 Climate policy 21

1.5 Summary of MRP’s proposed approach 25

2 Preparatory work to support and inform policy decisions on market instruments 26

2.1 Policy context and analysis of the role and implications of using market-based

instruments as mitigation tools 26

2.1.1 MRP general approach 26

2.1.2 MRP activities - Analysis of appropriate mitigation instruments for Morocco and

support for the establishment of MBI governance & mid-term review 32

2.2 Rationale for the selection of sectors 34

2.2.1 Electricity generation 37

2.2.2 Cement production 41

2.2.3 Phosphates extraction and processing 45

2.2.4 Energy efficiency in commercial buildings 51

2.2.5 Transport 53

2.2.6 Other sectors 55

2.3 Summary of the MRP’s proposed activities 58

3 Core technical, institutional and regulatory market readiness components 59

3.1 Data management and MRV 59

3.1.1 Current situation (institutional level) 59

3.1.2 Current situation (sectoral level) 60

3.1.3 MRP activities – Data management and MRV systems 64

3.2 Target/goal setting 71

3.2.1 Current situation (institutional and sectoral levels) 71

3.2.2 MRP Activities – Preparing to set targets 73

3.3 Registry 75

3.3.1 Current situation 75

3.3.2 MRP Activity – Implementation of a registry 75

3.4 Institutional and regulatory framework 76

3.5 Summary of activities proposed in the MRP 77

4 Planning for a market-based instrument 78

4.1 Types of MBI 78

4.2 Assessment and initial selection of an MBI for the three sectors covered by the MRP 78

4.3 Preparation for the implementation of a sectoral crediting scheme 79


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4.3.1 Current sectoral crediting schemes 79

4.3.2 MRP Activities – Design of a sectoral crediting mechanism 80

4.4 Summary of activities proposed in the MRP 83

5 Organization, communication, consultation and engagement 84

5.1 Organisational structure of the process 84

5.1.1 Key stakeholders 84

5.1.2 Stakeholder engagement process 85

5.1.3 MRP Activity – Coordinating the implementation of the MRP 87

5.2 Capacity building 89

5.2.1 Capacity building during the MRP preparation phase 89

5.2.2 MRP Activities – Capacity building during the MRP implementation phase 90

5.3 Summary of proposed MRP activities 91

6 Summary of activities, schedule and budget 92

6.1 Activities proposed in the MRP 92

6.2 PMR funding request 97

6.3 Summary diagram 98

6.4 Risks and mitigation measures 99

7 Sources 100

8 Annexes 103

8.1 CDM project and PoA portfolio (October 2013, source: MdE) 103

8.2 Approaches for setting a mitigation target/objective 106

8.3 Types of mitigation instruments 107

8.4 Programmes of international MRP missions 110


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Figures

Figure 1 Energy Balance Trend in Morocco, 2002 – 2012 16

Figure 2 Predicted installed capacity per fuel type, in % of total installed MW

17

Figure 3 Historical GHG net emissions in Morocco 18

Figure 4 GHG emissions trends 2000-2030 20

Figure 5 Preparation plan for the implementation of MBIs in Morocco and workflow of proposed MRP

activities 31

Figure 6 Mitigation potential by 2030 37

Figure 7 Energy mix for electricity generation in 2012 38

Figure 8 Wind and solar resources available in Morocco 39

Figure 9 Distribution of the electricity production by type of producer in 2012 40

Figure 10 Overview of cement plants and mills and expansion projects in Morocco 42

Figure 11 Evolution of total emissions from the cement sector in Morocco 43

Figure 12 Evolution of specific emissions from the cement sector in Morocco (tCO2/t cement) 44

Figure 13 Mining sites, chemical processing facilities and phosphates-dedicated ports in the

phosphates sector in Morocco

46

Figure 14 Production process in the phosphates sector 46

Figure 15 Possible development of market based instruments in Morocco 79

Figure 16 Institutional structure for the preparation of the MRP 85

Figure 17 Stakeholder engagement and consultation activities during preparation of the MRP 87

Figure 18 Institutional structure of the project 88

Figure 19 Summary diagram of activities – in chronological order 98

Figure 20 An emissions trading system and a crediting system 108


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Tables

Table 1 Selected assumptions for the projection of GHG emissions by 2030 19

Table 2 National, regional and international initiatives providing support for GHG mitigation in

Morocco 25

Table 3 Selection criteria for sectors to be covered by the MRP 35

Table 4 Evaluation table and sector selection 36

Table 5 Distribution of emissions from the electricity generation sector in Morocco 38

Table 6 Distribution of emissions from the cement sector in Morocco 43

Table 7 Distribution of emissions from the phosphates sector in Morocco 47

Table 8 Registered CDM projects and PoAs in Morocco in the three sectors covered by the MRP 49

Table 9 Summary of Building Block 1 activities 58

Table 10 Current institutional framework relating to data management 59

Table 11 MRV and data management in the three sectors covered by the MRP 61



Table 14 Stakeholders involved in the preparation for the carbon market 84


Table 16 Summary of activities (deliverables, timeline and budget) proposed in the MRP 92

Table 17 PMR funding request 97

Table 18 Inherent risks to the implementation of the MRP and proposed mitigation measures 99


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Background information

PMR Focal Point Morocco

Name Sabah Benchekroun Maria Oucible Mohamed Benyahia

Organisation Ministry of General Affairs and Governance

Ministry of Economy and Finance

Deputy Ministry to the Minister of Energy, Mining, Water, and Environment, in charge of the Environment

Title Special Advisor to the Prime Minister, International Cooperation Directorate

Head of Division, Multilateral Funding

Director of Partnership, Communication, and Cooperation

Address BP 412 RP Rabat, Royaume du Maroc

Administratif, Agdal, Rabat Royaume du Maroc

Hay Riad, Rabat Royaume du Maroc

Telephone +(212) 537 68 73 16 +(212) 537 67 72 71 +(212) 537 57 66 37

Fax +(212) 537 77 42 87 +(212) 537 67 72 17 +(212) 537 57 66 38

Email [email protected]

[email protected]

[email protected]

Website http://www.affaires-generales.gov.ma/

http://www.finances.gov.ma/

http://www.environnement.gov.ma

MRP Preparation Team

Name Organization

Mohamed Benyahia

Deputy ministry to the Minister of Energy, Mining, Water, and Environment, in charge of the Environment

Rachid Firadi

Azdine Daaif

Souad El Asraoui

Sabah Benchekroun Ministry of General Affairs and Governance

Saloua Jemjami

Maria Oucible Ministry of Economy and Finance

Said El Yaagoubi

Adrien de Bassompierre

World Bank

Andrew Losos

Manaf Touati

Soumia Driouch

Malika Drissi

Abdelmourhit Lahbabi ADS

Noémie Klein

Ecofys Alyssa Gilbert

Long Lam

Isabelle de Lovinfosse

Mounir Temmam

ECI Mounira Boussetta

Andalus Ben Driss

Chris Peddie-Burch SFW

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://www.affaires-generales.gov.ma/http://www.affaires-generales.gov.ma/http://www.finances.gov.ma/http://www.finances.gov.ma/http://www.environnement.gov.ma/http://www.environnement.gov.ma/


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Executive Summary

Morocco committed itself early and voluntarily to the international effort against climate change by

joining the United Nations Framework Convention on Climate Change (UNFCCC) during the 1992 Rio

Summit. Since then, Morocco was an early participant in the Clean Development Mechanism (CDM)

under the Kyoto Protocol and has explored the different types of nationally adapted mitigation

instruments such as NAMAs and the UNFCCC new market-based mechanism. These efforts will be

consolidated in Morocco’s Climate Change Policy (Politique du Changement Climatique au Maroc -

PCCM) currently under preparation. Within the vision of that Policy, market-based instruments (MBIs)

will be among the key tools for the implementation of mitigation efforts in Morocco.

In view of the country’s economic context and the international situation of the carbon market,

including the low demand for credits, the Moroccan government considers the implementation of a

crediting mechanism in three key sectors of the economy (electricity generation, cement

production, and phosphates processing) as a promising opportunity to encourage mitigation efforts.

The government wishes to establish this mechanism over the coming six years, both to generate

quality carbon credits and to be capable of integrating with an international system at the appropriate

time. The selection of the mechanism and the sectors and the commitment of the government are the

results of consultations between the governmental departments and the relevant sectors.

The Moroccan government wishes to use the funding from the Partnership for Market Readiness

(PMR) to establish the foundation needed for this sectoral crediting mechanism. This ‘no regret’

approach will be beneficial regardless of the evolution of the national and international context and for

all mitigation instruments the Moroccan government decides to put into place, whether market-based

or not. If the national and international signals are positive, particularly concerning the demand for

carbon credits, the government will be ready to advance and implement the next phase of activities

to operationalize the mechanism. The government plans to submit a second funding request from

the PMR to cover part of this further tranche of activities. This second tranche of activities will also

cover the preparation for the implementation of MBIs in additional sectors of the Moroccan economy.

The Market Readiness Proposal (MRP) presents the governmental roadmap to implement the sectoral

crediting mechanism. Proposed activities are organized around a central axis of data management

and Monitoring, Reporting and Verification (MRV). The activities of this axis will strengthen

capacity in Morocco in terms of GHG emissions data collection, management and processing at the

level of national institutions and the facilities in each sector. The focus will be on developing a system

that is appropriate for a crediting mechanism while ensuring flexibility to allow its adaptation based on

the evolution of the national and international context. This central axis is supported by:

Activities aimed at supporting the definition of a national strategy for MBI

implementation in Morocco. These activities will examine the different mitigation

instruments available to the government of Morocco and the relative weight of the MBIs in the

possible mix of instruments. They will enable the establishment of a governance system to

manage various general and MBI-specific greenhouse gas mitigation issues in Morocco. They

will also strengthen relevant stakeholders’ capacities in both the public and private sectors.

Sectoral activities that build market readiness in the three sectors covered in the MRP and

enable the development of the institutional and operational tools needed for MBI

implementation. These activities will support the creation of a regulatory framework needed

for mitigation in each sector, the definition of sectoral baselines, and the evaluation of the

mitigation potential of each sector. The focus on electricity generation, cement production,

and phosphates extraction and processing will allow an in-depth evaluation of carbon market


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preparation methods involving a limited group of participants, and will enable active exchange

of experiences between sectors while remaining within the grant amount allocated by the

PMR.

Pilot activities, which will start with MRV under this tranche of funding. All three sectors are

promising for the development of MBIs, and are interconnected with other economic sectors,

and pilot activities in these three sectors will allow other sectors to prepare for MBIs. Another

type of piloting, to operationalize the sectoral crediting mechanism with purchase of credits, is

planned for the second tranche of activities should demand for such credits exist.

The MRP mirrors the vision of the Moroccan’s government on MBIs: the first tranche of PMR funding

will cover the activities that will lay down the foundation for MBIs, and a second tranche activities will

enable the operationalization of these MBIs. The figure below shows specifically the activities that the

first tranche of PMR funding will enable.

The Moroccan government is requesting a first tranche of grant funding of USD 3,000,000 from the

PMR. All efforts will be made to have the PMR grant disbursement arrangements in place by the end

of 2014. Should that be achieved, the Project Management Unit will be established at the beginning of

2015 and the other activities will start during the second quarter of 2015, once the terms of reference

are prepared and the external entities recruited.


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Preparation plan for the implementation of MBIs in Morocco and workflow of proposed MRP activities

MBIs in

Morocco

Design and piloting of other instruments (e.g. tax, emissions trading scheme, non-market based instrument)

Analysis mitigationinstruments + governance MBI

2015 2018 202020172016 2019

Design MRV system+ piloting (3 sectors)

Design IT platform for data management et MRV + piloting (3 sectors)

Scaling-up MRV system (other sectors)

Mitigation potential(3 sectors)

Baselines (3 sectors)

Implementation regulatory framework (3 sectors)

Design + piloting crediting mechanism (3 sectors)

Project Management Unit (PMU)

Capacity building (sectors, institutions)

Design verification/accreditation system + piloting (3 sectors)

National registry

Evaluation + scaling-up (other sectors)

Crediting thresholds (3 sectors)

Baselines and crediting thresholds (other sectors e.g. transport)

Market-based Instruments

Governance

Review

Central axis on data management - MRV

Foundation for MBIsActivities part of the 1st tranche

of PMR funding

Legend

Design and operation ofMBIs

Activities envisaged for a 2nd

tranche


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1 Country context

1.1 Economic background and trends1

In recent years Morocco has achieved a remarkable economic performance. The country has

experienced an average annual growth rate of about 4.6% for the 2006-2012 period, in an

unfavourable international context marked by a global economic crisis as well as by the political and

social instability generated by the Arab Spring.

The contribution of the tertiary sector to the growth of Gross Domestic Product (GDP) was significant

over the same period, with an average growth rate of 5%. The added value of the primary sector has

increased annually by 4.8% on average. This trend is the result of the limited dependence of the

agricultural production on climate variations and of efforts to modernize and enhance the sector. The

secondary sector remains the weak link of the Moroccan economy with an average growth rate of

3.1% between 2006 and 2012. In parallel with this robust growth, emissions of greenhouse gases

(GHG) may have increased according to national predictions (see section 1.3) but their level remains

relatively modest, making Morocco a low emitter compared to other countries in the region.

Nevertheless an economic slowdown was witnessed in 2012, with a Gross Domestic Product (GDP)

growth of just 3.2%. This was due to a poor agricultural season, widening twin deficits (trade and

budget), the depletion of foreign exchange reserves, falling tourism revenues, the lack of bank

liquidity, and the erosion of household purchasing power. Economic growth should nevertheless

return to its previous upwards trend, driven by good performance in the agricultural sector, while the

secondary sector recovers modestly due to the low foreign demand, mainly from countries from the

Euro zone. It should be noted that beyond its significance for the economy, the agricultural sector

plays an important social role as it employs about 40% of the Moroccan population.

Morocco’s current account has experienced another downturn and export growth has decreased by

5.5% in 2012 while the trade deficit grew from 22.8% to 24.3% of GDP. After a year of virtual

stagnation, the decreasing trend in exports was confirmed in 2013, particularly with the import of

phosphates and derivatives and the decline of 23.3% of the export revenue of the National

Phosphates Company (Office Chérifien des Phosphates or OCP) cumulating at 37.1 billion dirhams at

the end of 20132. On the other hand, slowing imports have been strongly affected by increasing

energy expenses. Morocco has limited conventional energy resources and virtually depends on foreign

energy supply to meet the increasing demand related to its economic growth. This strong dependency

might gradually lessen in the future given Morocco’s huge potential and commitment for renewable

energy (see section 1.4; renewable energy represents about 10% of electricity generation in 20123,

with the objective of an installed capacity of 42% by 20204). In the meantime, the national economy

remains highly vulnerable to any upsurge in the price of oil, particularly in the current context of the

reform of the compensation system in Morocco leading to a liberalization of oil prices.

1 Data collected in the Bank al Maghrib Annual Report for 2012, published in July 2013 and from the 2014 Financial and Economic Report,

published by the Ministry of Economy and Finance. 2 Conjecture note – January 2014, published by the Ministry of Economy and Finance. 3 ONEE (2012) 4 MEMEE (2013b)


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Despite continuing signs of an economic slowdown, notably a deterioration in fiscal and external

balances, the Central Bank’s most recent forecasts predict growth around 4% for 2013, with a

contained inflation at around 2.1%. For 2014, the growth is predicted to be around 4% based on an

average agricultural season, an assumption that seems to be confirmed by the registered rainfall5.

The rise and resilience of the Moroccan economy, especially in a difficult international context, are

explained by the importance of structural reforms underway and the implementation of new sectoral

plans, such as:

The National Industrial Emergence Pact (Pacte National d’Emergence Industrielle - PNEI),

which aims to revitalize industry;

The Green Morocco Plan 2020 (Plan Maroc Vert 2020), whose main objective is to

modernise agriculture, and the Emergence Plan for Phosphates (Plan Emergence pour les

Phosphates);

The New National Energy Strategy (Nouvelle Stratégie Energétique) adopted in 2009,

which primarily aims to strengthen the security of supply, energy availability and its

widespread accessibility at reasonable costs;

The Vision 2020 for the Tourism Sector (Stratégie Touristique Nationale Vision 2020),

which aims to make this sector an economic powerhouse;

The National Management Plan for Household and Similar Waste (Plan National de gestion

des Déchets Ménagers et assimilés PNDM);

The National Master Plan for Hazardous Waste (Plan Directeur National des Déchets

Dangereux PDNDD);

The National Strategy for the Development of Logistical Competitiveness for the Transport

Sector (Stratégie Nationale pour le Développement de la Compétitivité Logistique); and

The Halieutis Plan for the development of new dynamics for fisheries.

It should be noted that the implementation of these sector-wide plans associated with the robust

growth in household consumption (vehicles, household items, etc.) considerably influence energy

needs, which are projected to increase in the coming years at an average annual rate of 5%6. This

growth will probably be associated with a substantial increase in GHG emissions as the energy sector

contributes to over 52% of the total emissions in Morocco, followed by the agricultural sector with

31% (data for 2004, see section 1.3)7.

1.2 Energy profile8

Morocco strongly depends on the import of hydrocarbons. Poor in fossil fuels and experiencing a

significant economic, industrial, and social evolution, the country covers its deficit by importing most

of its supplies. The consumption of primary energy has considerably increased over the last decade,

by about 6%9 annually, from 10.5 megatonnes of oil equivalent (Mtoe) in 2002 to 17.7 Mtoe in 2012,

leading to a dependency rate of 96% for that year (see Figure 1). Consumption per inhabitant per

year has increased substantially, from 0.36 toe in 2002 to 0.54 toe in 2012. However, this rate

remains relatively modest compared to the world average of about 1.7 toe10.

5 Prediction of the Ministry of Economy and Finance under the 2014 Finance Act 6 MEMEE (2013b) 7 SEEE (2009b) 8 MEMEE (2012b) 9 MEMEE (2013b) 10 MEMEE (2013b)


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The main factor is the increase of net energy demand, which grew continuously from 15,539 GWh in

2002 to 31 056 GWh in 2012. This increase is mainly due to the near-universality of rural

electrification following the Global Rural Electrification Program (PERG) and to the dynamic national

economy.

Figure 1 Energy Balance Trend in Morocco, 2002 – 2012 (Source: MEMEE (2012b))

National consumption is characterized by the predominance of oil products, representing 61% in 2012

and the largest imported product, followed by coal. Massively used for electricity generation, oil

products have increased to represent 22% of the total consumption of energy in 2012. Natural gas

has increased slightly but only represented less than 7% of the total energy consumption in 2012.

The various scenarios predict an exponential trend in primary energy demand, mainly due to the

strong economic growth over the last decade, which should gain momentum after the implementation

of various sectoral plans (examples in section 1.1) established to develop major sectors in Morocco.

Energy demand is also impacted by population growth associated with rising living standards. In light

of those predictions and to limit its energy dependency, in 2009 Morocco adopted an ambitious

energy strategy going forward to 2030 to mitigate its dual dependency on fossil fuels and on foreign

imports. Environmental protection and sustainable development are at the core of this new strategy,

which focuses on energy efficiency and the renewable energy potential available in Morocco to ensure

supply and keep demand under control.

The energy mix should experience major changes by 2020 due to an increase in the share of

renewable energy and the implementation of the national energy efficiency program. Based on the

projections in the new energy strategy, the expected diversification of the electricity generation

capacity by 2020 should be as follows:


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Figure 2 Predicted installed capacity per fuel type, in % of total installed MW (Source: MEMEE (2013b), ONEE

(2012))

1.3 Historic and projected emissions trends

According to data from the 1994 GHG National Inventory produced as part of the Initial National

Communication (INC, 2001), and from the Second National Communication’s (SNC, 2010) reference

years of 2000 and 2004, Morocco’s total GHG emissions increased by 56% between 1994 and 200411.

The creation of inventories in line with the methodology recommended by the United Nations

Framework Convention on Climate Change (UNFCCC) and that of the Intergovernmental Panel on

Climate Change (IPCC) has allowed the emissions generated by Morocco to be accounted for in each

of the most emissions-intensive sectors, namely: Energy, Industry, Agriculture, Forestry and Waste

(see section 2.2).

It is useful to note here that emissions from the energy sector are produced by:

Fixed combustion sources, which includes the energy industry, manufacturing and

construction, commercial buildings, residential buildings, agriculture and fisheries; and

Mobile combustion sources, including all modes of transport.

Therefore, the energy sector represents more than half of all emissions generated and is by far the

main emitter of carbon dioxide (CO2) and GHGs in general in Morocco. Emissions from this sector also

experienced a net increase of approximately 46% from 1994 to 2004.

The agricultural sector ranks second with a contribution to overall emissions of approximately 31% in

the reference year 2004, while emissions from other sectors (industry, forestry and waste) contribute

to 17% of overall emissions that same year. It should be noted that for some sectors, such as the

cement sector, only CO2 emissions are considered GHG.

11 Source: SEEE (2009b)


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Figure 3 Historical GHG net emissions in Morocco (Source: SEEE, 2009)

The analysis of GHG emissions in Morocco shows that the main factors impacting their increase

include:

A rapid and variable demographic growth in the 20th century, with an annual growth rate of

over 3% in the 1950s to a rate of 1.4% in 2004 and 1.1% in 2007;

The socioeconomic development that influences the consumption patterns of the population;

Economic development through the consumption of energy by the productive sectors; and

Regional planning and land-use.

The projection of GHG emissions by 2030 is based on assumptions for the relevant sectors, as

illustrated in Table 1, below.


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Table 1 Selected assumptions for the projection of GHG emissions by 2030 (Source: SCN)

Selected assumptions for the assessment of GHG emissions by 2030

Population Evolution of the total population despite a slowing growth rate: population estimated at 38 million

Rural exodus and extension of urban centres (percentage of urban population = 64.2%).

Energy

Electricity: Introduction of renewable energy (RE) and increase of national production by about

140%;

Consumption of primary energy estimated at 32.7 ktoe.

Industrial

processes

Cement industry: Growth rate from 3% to 4%12;

Other emitting industrial activities: growth rate of 6.92%, equal to the average rate of the last

three periods.

Agriculture

Production increase for various crops (cereals, legumes, oilseed, vegetables, etc.) based on the

different strategies established by the Ministry of Agriculture;

Livestock trends related to increasing consumption of red meat (2.05% annually for cattle and

3.68% for sheep) and white meat (8%).

Forests Reduction in the use of firewood mainly due to 1) Change of lifestyle in urban centres 2) Easy

access to butane gas in rural areas, 3) Gradual exhaustion of available biomass.

Waste

Waste production increase of 3% per year due to 1) Population growth, 2) Fast urbanization, 3)

Evolution of consumption patterns, 4) Organization of solid waste management.

Waste production is expected to reach 14 megatonnes (Mt) in 2030.

The assumptions expressed above lead to an expected average increase in total GHG emissions of

3.72% between 2000 and 203013. Over the same period, net per capita emissions would grow from

2.29 to 5.12 tCO2eq, an average annual increase of 2.75%, exceeding the estimated rate of

population growth of 0.94%.

12 Source: APC. 13 The calculation assumptions and the GHG emissions projections will be reviewed as part of the TNC in preparation.


20

Figure 4 GHG emissions trends 2000-2030 (Reproduced from SEEE, 2010)

Regarding the process of collecting data and preparing national inventories, Morocco is aware of the

importance of establishing an GHG Inventory Information System (Système d’Information de

l’inventaire des GES, SI GES) backed by formal institutional processes, in order to overcome the

shortcomings related to casual data collection for the purposes of an inventory. With this in mind, a

feasibility study for the implementation of such a SI GES took place with the support of the World

Bank. Previous inventories (1994 and 2000) were analysed in a critical manner and data required for

the establishment of a SI GES were mapped. This allowed 1) the creation of a proposal for

institutional arrangements for the regular and accurate establishment of GHG inventories, 2) the

identification of capacity building needs and 3) the development of a plan of action. The first actions

relating to the development of the SI GES are included in the Third National Communication (TNC).

Annual activity data for the period 2005-2012 will be collected as part of the TNC, and will allow the

update of national GHG inventory for the years 2006, 2008, 2010 and 2012. Capacity building efforts

relating to the methodologies, techniques and tools for preparation of a national GHG inventory will

also be implemented as part of the TNC, and will assist the work of the team charged with putting the

future SI GES in place. These actions are expected to take place in 2014.

Other institutional capacity building measures and techniques will be included in a new project to be

implemented by GIZ between 2013 and 2015, relating to the establishment of a Centre for Climate

Change Competencies (4C – see Table 2). This project, which will enhance the implementation of the

cross-cutting themes of ‘Improving knowledge and observation’ and ‘Promoting research, innovation

and technology transfer’ from Morocco’s Climate Change Policy (Politique du Changement Climatique

au Maroc, PCCM – see section 1.4), will support, among other things, the activities put in place by

the SI GES.


21

1.4 Climate policy

Morocco committed itself early and voluntarily to the international effort against climate change by

joining the UNFCCC during the 1992 Rio Summit14. Since then, Morocco has implemented a number

of activities and programmes that confirm its voluntary commitment. These activities also provide the

foundation for a transition towards a green economy aimed at achieving responsible growth by

preserving the environment and ecosystems, reducing GHG emissions and adapting to the effects of

climate change. These activities have enabled Morocco to distinguish itself and become a leading

figure in Africa and in the Middle East and North Africa (MENA) region in the fight against global

warming.

Moroccan international engagement under the UNFCCC

Morocco is considered a leader among developing countries in terms of compliance with international

reporting commitments under articles 4 and 12 of the UNFCCC. Relevant measures include:

Preparation of national communications:

o Submission of the INC in 2001;

o Submission of the SNC15 in 2010;

o Preparation for the implementation of the Cancun Agreements (CoP 16). This is

underway through the elaboration of the TNC, due in late 2014, and the

establishment of a SI GES16 to support potential Biennial Update Reports (BURs);

Organisation of the 7th Conference of the Parties (CoP 7) in Marrakech in 2001 and active

participation in other CoPs with the organisation of and participation in side events and in the

work of the subsidiary bodies, including the Subsidiary Body for Scientific and Technological

Advice (SBSTA) and the Subsidiary Body for Implementation (SBI);

Submission to the UNFCCC Secretariat, on 29 January 2010, of a list of ideas for Nationally

Appropriate Mitigation Actions (NAMAs) in response to the Copenhagen Accord. These NAMAs

cover the energy, transport, industry, waste, agriculture, forestry and housing sectors. For

the majority of actions, Morocco has also provided the annual mitigation potential in tCO2e as

well as the required implementation period;

Submission to the UNFCCC Secretariat on 25 March 2013 of Morocco’s views on the work

program, modalities and procedures for a new market-based mechanism (NMM), in response

to COP 18 decisions in Doha (paragraphs 50 and 51 of the decision -1/CP.18) (see section

2.1.1 for more details on the contents of the submission).

Institutional and organisational framework

Upon ratification of the UNFCCC, Morocco launched an initiative to create a progressive institutional

framework through the establishment of various structures, including:

A National Climate Change Committee (Comité National sur les Changements Climatiques -

CNCC) in 1996;

A National Scientific and Technical Committee on Climate Change (Comité National

Scientifique et Technique sur les Changements Climatiques - CNST-CC) in 2001;

A Climate Change Unit (Unité Changements Climatiques - UCC) created in 2001 within the

Department of Environment. This unit is the UNFCCC national focal point and works with other

institutions such as the National Meteorology Directorate (Direction de la Météorologie

Nationale - DMN), which serves as the IPCC focal point;

14 Morocco signed the UNFCCC in Rio in 1992 and ratified it in 1995. 15 SEEE (2010) 16 World Bank (2011a)


22

A Clean Development Mechanism Designated National Authority (CDM DNA) in 2002;

Other climate change units and officials within other ministerial/government departments.

Within the new dynamics in Morocco, particularly with regard to sustainable development through the

adoption of Bill 99.12, a Framework Law for the National Charter of the Environment and Sustainable

Development17 (CNEDD) and the ongoing development of the National Sustainable Development

Strategy (SNDD), the institutional framework for climate change needs to be reassessed. Reviews are

underway to evaluate the adequate options for the implementation of a new institutional framework

for climate change, aligned to the new sustainable development governance required by the

Framework Law for the CNEDD.

Climate Change Policy in Morocco ‘PCCM’ (under preparation)

The activities implemented since ratification of the UNFCCC

have been used as building blocks for the preparation of a

Climate Change Policy (Politique du Changement Climatique

au Maroc, PCCM), which is currently being developed. The first

elements were provided by the INC and SNC, and have

allowed for the preparation of the National Plan against Global

Warming (Plan National de lutte contre le Réchauffement

Climatique, PNRC)18, which was introduced in 2009 in

conjunction with CoP 15 in Copenhagen. Building on various

sectoral programmes and strategies, the PNRC is a portfolio of

mitigation and adaptation measures. More recently, a process

to prepare strategic climate change guidelines was launched

with the support of GIZ and other donors and financial

institutions.

These strategic guidelines will help to provide Morocco with a

PCCM that contains a National Vision 2030 linked to the

expected timeframes for fulfilment of all relevant sectoral

strategies, and that has political support at both national and international levels (see Box 1).

Launched in 2011, the development of the PCCM is being carried out through the organisation of

different workshops and meetings bringing together different stakeholders, including the Deputy

Ministry in charge of the Environment (MdE) and an inter-ministerial committee comprised of

representatives from all ministries and public institutions concerned with climate change. The

document is currently being developed by the MdE and its formal adoption by the government is

expected in 2014.

This PCCM will be based on two principles: i) decoupling economic growth from GHG emissions,

particularly through the use of clean technologies; and ii) preserving the country’s territory and

ecosystems in the most appropriate manner, by responding effectively to national vulnerabilities and

by developing an adaptation policy that will prepare the general population and economic

stakeholders to address those vulnerabilities.

17 The Framework Bill n°99.12 was adopted on January 8, 2014 at the House of Representatives of the Moroccan Parliament. This Framework

Bill still needs to be adopted at the level of the House of Councilors of the Parliament. 18SEEE (2009a)

Box 1 Climate Change Policy in

Morocco

Morocco aims to achieve sustainable,

low-carbon development resilient to the

impacts of climate change, and to

contribute to global efforts against

climate change.

The National Vision 2030 was

established to adopt coherent sectoral

and inter-sectoral strategies, some of

which have already aligned themselves

to this timeframe. The PCCM is intended

as a flexible and dynamic instrument

combined with a monitoring and

evaluation tool that will allow for

necessary refinements over time.


23

Experience with market-based instruments (MBIs)

In order to participate in the global effort to mitigate GHGs and consolidate and strengthen its

national sustainable development policy, Morocco was an early participant in the Clean Development

Mechanism (CDM), one of the MBIs prepared under the Kyoto Protocol. It therefore ratified the Kyoto

Protocol in 2002 and at the 7th CoP (Marrakech, 2001) pushed to ensure that legislation implementing

the Protocol and its flexible mechanisms were adopted.

As part of this commitment, Morocco set up its DNA in 2002 and has implemented a series of capacity

building activities for project developers and national experts, as well as activities raising awareness

of the CDM at both the national and international level.

As of October 201319, Morocco is ranked 4th in Africa in terms of registered CDM projects, with 14

projects and 3 PoAs, which have a total emissions reduction potential of 2.4 MtCO2e/y.

The main sectors involved in the CDM in Morocco are: wind energy (first registered CDM wind farm in

Africa, and a PoA registered at the end of 2012), biomass energy, waste management, and solar

energy. Although a portfolio of CDM projects has been developed in recent years, only a fraction of

the total CDM potential has so far been realised. This is mainly due to the complexity of the

mechanism and its constantly changing rules, the criteria for proving financial additionality, the

transaction costs, and the limited experience available in the country due to the need to bring in

external specialist consultants.

NAMAs and capacity building

At the international level, Morocco is also involved in non-market based instruments. Morocco has

proceeded to develop an initial portfolio of NAMA ideas bringing together the main mitigation actions

recommended by the PNRC, presented at a side event at CoP 15 in Copenhagen (2009). Morocco’s

voluntary commitment was confirmed through its Mitigation Pledge submitted in response to the

Copenhagen Accords in January 2010. This Pledge was accompanied by a list of 43 appropriate

mitigation actions covering the energy, transport, industry, waste, agriculture, forestry and buildings

sectors.

In this initial portfolio, three NAMA concepts were developed in 2011 for the renewable energy sector

and the waste sector, with World Bank support. These three NAMAs are associated with the Moroccan

Solar Plan (Plan Solaire Marocain)20, the National Wind Energy Programme (Programme National

Eolien)21 and the National Solid Waste Programme (Programme National des Déchets Ménagers –

PNDM)22 respectively, and will be further elaborated and improved through donor-funded projects

currently in operation. These donor-funded projects will also support the development of NAMAs in

other sectors, including energy efficiency in buildings, transport, agriculture, and industrial processes

(see LECB and FIRM projects in Table 2).

In the same context, three NAMA concepts were developed by the Agency for the Development of

Renewable Energy and Energy Efficiency (ADEREE) in partnership with the MdE. The three projects

were presented during the WBI/WB and RCREEE workshop in Marseille in 2012:

19Source: Moroccan CDM-DNA 20World Bank (2011b) 21World Bank (2011c) 22World Bank (2011d)


24

1) Construction NAMA for widespread implementation of Moroccan thermal regulations in the

construction sector;

2) NAMA for solar photovoltaic (PV) pumping for irrigation at a national scale;

3) NAMA for a national program to distribute solar PV kits connected to the LV/MV grid.

In terms of capacity building, Morocco has benefited recently from activity relating to the monitoring,

reporting and verification (MRV) of GHG emissions by the Japanese Environment Ministry, as part of a

programme also aimed at 11 other African countries to use a MRV model on a pilot project in the

transport sector.

In relation to international climate change negotiations, the Moroccan delegation has benefited from

capacity building assistance before each CoP since 2010, under the Programme for Environmental

Protection and Management (Programme de Protection et de Gestion de l’Environnement, PGPE)

implemented by GIZ and the MdE.

Currently, Morocco is benefiting from several capacity building projects and programmes, as well as

technical assistance in GHG mitigation (see Table 2). Some of these projects fall under the scope of

international initiatives (FIRM, LECB, and CDM/JI Initiative projects), while others fall under regional

initiatives (Clima South project), or directly under national bilateral or multilateral projects. Together,

these initiatives are designed to build technical and institutional capacity in Morocco for the design

and development of NAMAs, the implementation of MRV systems, the preparation of national

strategies for low carbon development, and the ongoing international dialogue on the future

development of the carbon market. The activities proposed as part of the PMR presented in this

document were set to take into account the direction that the Morocco government is taking as part

of its PCCM, as well as its involvement in international climate negotiations and in ongoing

international initiatives aimed at strengthening Morocco’s mitigation capacity. The next Building Block

of the document describes the approach the MRP will take and explains the process used for selecting

the sectors covered by the MRP.


25

Table 2 International initiatives providing support for GHG mitigation in Morocco23

Project Implementing

agency

Implementing

partner in

Morocco

Expected project outcomes & Budget24 Duration

PMR World Bank MAGG/MEF/

MdE

Preparation of the MRP as a preliminary step to obtaining the PMR

grant

Implementation of MRP activities to establish the foundation and

operationalise MBIs in the electricity, cement and phosphates sector.

From 2013

LECB UNDP MdE

Development of a LEDS for Morocco;

Development and implementation of a portfolio of three NAMAs

(agriculture, buildings, waste);

Development of MRV systems for priority NAMAs and capacity

building for relevant stakeholders;

Improving awareness of low carbon development and south-south

transfer of know-how in this field.

Budget: USD 749,000.

2013-2015

FIRM UNEP MEMEE/Energy

Establishment of a framework for the development and

implementation of a national strategy for low carbon development

(energy sector);

Identification of priority NAMAs and support for the development of

1 to 2 NAMAs (solar).

Budget: USD 300,000.

2013-2015

CIC

World Bank –

Climate

Technology

Initiative25

Currently being

validated

The CTI supports access to new climate technologies for innovative

businesses in Morocco, including SMEs, by providing financing,

advisory services, access to technology and information, and

international networking.

Currently

being

validated

CDM/JI

Initiative GIZ MdE

Capacity building relating to NMMs;

Sharing of best practice and international carbon market

experiences.

Budget: EUR 3,790,000.

2012-2015

Clima

South EU MEMEE

Identification and development of LEDS and NAMAs and estimations

of their GHG emissions;

MRV capacity building;

Improved regional cooperation on MRV, NAMAs and LEDS

Budget: EUR 5,000,000.

2013-2016

4C GIZ MdE

Institutional capacity building

Development of instruments such as the GHG emissions information

system (SI GES)

Stakeholder capacity building

International dialogue and sharing of experiences

Budget: EUR 2,000,000

2013-2015

TNC UNDP MdE

Updating the Moroccan data on GHG inventory

Updating the GHG mitigation analysis

Updating the assessment of Morocco’s vulnerability to CC and the

major directions for adaptation to CC

Defining national needs for capacity building and technology

transfer;

Budget: EUR 530,000

2013-2015

1.5 Summary of MRP’s proposed approach

No activities are proposed in this section of the MRP.

23Table 2 presents the program and the main projects to support the GHG mitigation policies in Morocco and cannot be considered exhaustive

or complete. 24 Budget figures are provided based on information available 25World Bank (2012a)


26

2 Preparatory work to support and inform policy

decisions on market instruments

2.1 Policy context and analysis of the role and implications of using market-based instruments as mitigation tools

2.1.1 MRP general approach

The PMR initiative is part of the Moroccan government’s broader reflection on the country’s

integration into the international carbon market. The new MBIs which are currently emerging as part

of the UNFCCC international negotiations (known as the New Market-based Mechanisms, or NMMs)

and at the national level in certain countries (e.g. pilot emissions trading schemes in China) show the

level of interest among the international community towards using MBIs as key instruments in the

fight against climate change. This interest is a response to the growing need to reduce emissions in

order to limit global temperature rise to 2 degrees while minimising the costs of mitigation.

As discussed in Building Block 1, the Moroccan government is closely following the developments of

the carbon market, and in March 2013 voiced its opinion on the NMM in its submission to the UNFCCC

Secretariat in response to the decisions of CoP 18 in Doha26. In it, Morocco indicated that the post-

2012 international framework should consider both market-based and non-market-based new

mechanisms, by also including a sectoral/sub-sectoral approach in addition to a project-based one.

The government of Morocco is currently formalizing its intent to explore MBIs other than the CDM in

the PCCM (under development). Under this political vision, MBIs will constitute one of the

implementation tools of the climate change mitigation strategy (see section 1.4).

The selection, design, and implementation of MBIs must take into account both the national context

and the international situation. In particular, the following points should be considered:

Morocco represents approximately 0.15% of worldwide GHG emissions27. Morocco’s

contribution to global mitigation efforts should take into account the concept of effort

sharing.

Morocco is a developing country and is not intending to set binding emissions reduction

targets at either the national or the sectoral level in the short run.

The Moroccan government is currently in the process of developing the PCCM but

has not yet evaluated the different mitigation mechanisms that could be used in

Morocco and their potential impact. Any MBI development will need to keep in line with

the development of the PCCM and ensure it is integrated into this framework. A thorough

analysis of all types of tools to mitigate GHG emissions, both market based and non-market

based, and of their impact on the Moroccan economy is a pre-requisite before any approach

can be selected for implementation.

Morocco has significant experience with the CDM and would be able to draw on this

experience when designing and implementing other MBIs. Any new MBI should be able to

combine simplicity and efficiency with environmental integrity and should contribute to

capacity building in Morocco, at both the sectoral and institutional level.

26 Paragraphs 50 and 51 of decision -1/CP.18 27 Calculated from data for 2010 available in the European Commission’s EDGAR database


27

At the international level demand for carbon credits is low. Countries have not yet

agreed on how to update and adjust their GHG reduction targets, which has maintained

uncertainty in terms of future demand for such credits. Artificial demand could be created by

setting up funds to purchase carbon credits from MBIs other than the CDM, such as from a

sectoral crediting mechanism. Morocco will consider the progress of such initiatives to update

its roadmap for the implementation of MBIs. However no such fund has been established to

date.

At the international level, under the UNFCCC, the rules governing the NMMs have

not yet been defined. The CDM therefore remains the only UNFCCC MBI open to Morocco,

and it is not currently possible to develop a NMM that can be recognised by the UNFCCC.

It is too early to set up a domestic emissions trading scheme in Morocco. There are

certain preconditions necessary for the establishment of such a system, such as the setting of

a binding emissions reduction target, which is not expected to happen in Morocco in the near

future. In addition, there are not enough potential participants in each of the three sectors

covered in the MRP to create a liquid market, and joining an existing market or linking to such

a market needs comprehensive preparation domestically. A crediting system, with non-

binding targets, which does not lead to penalties for non-compliance with targets, and which

does not require a minimum number of participating installations, seems therefore more

suitable for Morocco, at least initially.

In view of the country’s economic context and the international situation of the carbon market,

including the low demand for credits, the Moroccan government plans to evaluate the implementation

of a crediting mechanism in three key sectors of the economy (electricity generation, cement

production, and phosphates processing) as a promising opportunity to encourage mitigation efforts.

The government wishes to develop such a mechanism within the next six years, both to generate high

quality carbon credits and to be capable of integrating with an international system at the appropriate

time. The selection of the mechanism and of the sectors and the achievement of government

commitment are the results of consultations between government departments and the various

sectors. The MRP activities will consolidate these choices and help explore other options.

The Moroccan government wishes to use the funding from the PMR to establish the foundation

required for the sectoral crediting mechanism. This ‘no regret’ approach will be beneficial regardless

of the evolution of the national and international context and for all mitigation instruments the

Moroccan government decides to put into place, whether market-based or not. This aspect will be

reviewed in detail during the mid-term review (see Activity 2). At the end of the activities covered by

the first tranche of PMR funding, Morocco will have the necessary capacities to advance and

implement the next phase of activities to operationalize the mechanism, should the national and

international signals be positive, particularly concerning the demand for carbon credits. The

government plans to submit a second funding request from the PMR to cover part of this further

tranche of activities. This second tranche of activities will also cover the preparation for the

implementation of MBIs in additional sectors of the Moroccan economy.

The MRP presents the governmental roadmap to implement the sectoral crediting mechanism. The

proposed activities are structured around a central axis on data management and MRV. The activities

of this axis will strengthen capacity in Morocco in terms of GHG emissions data collection,

management and processing at the installation level. The type of MRV system will depend on the

choice of mitigation instrument. The focus will be on developing a system that is appropriate for a

crediting mechanism while ensuring flexibility to allow its adaptation based on the evolution of the

national and international context.


28


29

This central axis is supported by:

Activities aimed at supporting the definition of a national strategy for MBI

implementation in Morocco. These activities will enable the establishment of a governance

system to manage various general and MBI-specific GHG mitigation issues in Morocco. They

will also help the identification of the relevant mitigation instruments and will strengthen

relevant stakeholder capacity in both the public and private sectors.

Sectoral activities that build market readiness in the three sectors covered in the MRP and

enable the development of the institutional and operational tools needed for MBI

implementation. These activities will support the creation of a regulatory framework needed

for mitigation in each sector, the definition of sectoral baselines, and the evaluation of the

mitigation potential of each sector. The focus on electricity generation, cement production,

and phosphates extraction and processing will allow an in-depth evaluation of carbon market

preparation methods involving a limited group of participants, and will enable active

exchange of experiences between sectors while remaining within the grant amount allocated

by the PMR.

Pilot activities, which will start with MRV under this tranche of funding. As discussed in

section 2.2, the three sectors covered are promising for the development of MBIs and are

interlinked with other economic sectors, and pilot activities in these sectors will allow other

sectors to prepare for MBIs. Another type of piloting, to operationalize the sectoral crediting

mechanism with purchase of credits, is planned for the second tranche of activities should

demand for such credits exist.

Other countries under the PMR are exploring similar topics (e.g. MRV in Turkey, Thailand and

Indonesia) and/or working in similar sectors (e.g. cement in Tunisia and Indonesia). Morocco will seek

to maximize the synergies and experience sharing with such initiatives.

The MRP mirrors the vision of the Moroccan’s government on MBIs: the first tranche of PMR funding

will cover the activities that will lay down the foundation for MBIs, and a second tranche of activities

will enable the operationalization of these MBIs. Figure 5 below shows specifically the activities that

the first tranche of PMR funding will enable.

All efforts will be made to have the PMR grant disbursement arrangements in place by the end of

2014. The Project Management Unit (see section 5.1.3) would be established at the beginning of 2015

and the other activities could start during the second quarter of 2015, once the terms of reference are

prepared and the external entities recruited.

The sequence of activities proposed in the MRP is shown in Figure 5 below. Tables describing each

activity in more detail can be found in the following sections of this MRP. The numbers shown in

Figure 5 refer to the number of each activity, which is also included in the description tables. The

numbering follows the order in which the activities are presented in subsequent sections of the MRP.


30

MBIs in

Morocco

Design and piloting of other instruments (e.g. tax, emissions trading scheme, non-market based instrument)

Analysis mitigationinstruments + governance MBI

1

2015 2018 202020172016 2019

Design MRV system+ piloting (3 sectors)

3

Design IT platform for data management et MRV + piloting (3 sectors)

5

Scaling-up MRV system (other sectors)

6

Mitigation potential(3 sectors)

Baselines (3 sectors)

Implementation regulatory framework (3 sectors)

10

Design + piloting crediting mechanism (3 sectors)

11

Project Management Unit (PMU)13

Capacity building (sectors, institutions)14

Design verification/accreditation system + piloting (3 sectors)

4

National registry

9

Evaluation + scaling-up (other sectors)

12

Crediting thresholds (3 sectors)

11 Baselines and crediting thresholds (other sectors e.g. transport)

12

Market-based Instruments

Governance

Review2

Central axis on data management - MRV

Foundation for MBIsActivities part of the 1st tranche

of PMR funding

Legend

Design and operation ofMBIs

Activities envisaged for a 2nd

tranche

7

8


31

Figure 5 Preparation plan for the implementation of MBIs in Morocco and workflow of proposed MRP activities


32

2.1.2 MRP activities - Analysis of appropriate mitigation instruments for Morocco and

support for the establishment of MBI governance & mid-term review

The first proposed activity under the MRP (Activity 1) aims to support the government in the analysis

of the role and implications of using MBIs as mitigation tools, in order to help make an informed

choice of the instrument(s) to use, and to implement a system of governance for MBIs in Morocco.

A range of mitigation policy instruments is available. This includes not only different carbon pricing

methods (two main MBIs, crediting schemes and emissions trading schemes, and also taxes) but also

other instruments that do not directly set a price on a tonne of CO2, such as financial incentives or

regulatory measures (see section 4.1 for more details on each of these instruments). A choice of

instrument can only be made after a thorough analysis of the impact that each of these can have on

both a given sector and on the Moroccan economy. The type of instrument to introduce can differ

depending on the type of sector, the sector’s level of involvement in the PCCM, and previous

experience available both in Morocco and at the international level. The Moroccan government has not

yet thoroughly evaluated each of the different instruments and their potential effects. Activity 1 will

enable such evaluation and inform the future decisions on MBIs by the Moroccan government. It will

be based on the initial overview of policies presented in the MRP and will review the optimal use of

MBIs as part of the available range of instruments. Activity 1 will also examine the interaction of

proposed MBIs with selected instruments in place or planned, domestically and internationally (e.g.,

the CDM, the EU ETS, the NMM), including carbon leakage risks and potential synergies.

Selection of instruments should also be supported by effective governance, of both GHG mitigation

generally and MBIs in particular. At the institutional level, issues relating to the current MBI, the CDM,

are addressed by the National CDM Board, a body created in 2002 following a ministerial decision.

This Board is composed of representatives from government departments, the private sector and non-

governmental organisations. The experience of this Board will need to be applied in the development

of an operational framework for stakeholder consultation and coordination, as well as in the

development of an effective MBI governance system and of a clear mandate for the approval and

implementation of new pilot market mechanisms. In addition to the National CDM Board, the current

institutional CC framework consists of the National Climate Change Committee (Comité National des

Changements Climatiques, CNCC) and the National Scientific and Technical Committee on CC (Comité

National Scientifique et Technique sur les CC, CNST-CC). Different studies on national climate change

governance have been undertaken in Morocco with support from the World Bank and GIZ. These

studies helped to propose possible CC governance structures for Morocco. They will be capitalized

under the enforcement of the Framework Law on CNEDD, which is in its final phase of enactment and

will institute the national governance framework for CC, with a large political scope, to fully play its

role of strategic orientation and sectoral arbitration including for MBIs. Activity 1 will help coordinate

such initiatives and support the implementation of adequate MBI governance.

The second proposed activity (Activity 2) is a mid-term review of the progress of Morocco to prepare

MBIs in general and of the implementation of the sectoral crediting mechanism for three sectors in

particular. It will be important to assess progress in light of national and international developments,

particularly the demand for carbon credits, in order to plan for the coming years. This will also provide

the opportunity to prepare a second request for a PMR grant.


33

Activity 1 Analysis of appropriate mitigation instruments and MBI governance for Morocco

To be implemented in the period 2015-2017, as part of a first tranche of PMR funding

Activity objectives

This activity aims to assist the Moroccan government in evaluating different mitigation

instruments, including MBIs, in order for the government to make an informed decision

on which instruments should be applied in Morocco and to assist the government in

setting up a governance system for MBIs in Morocco.

Activity description

√ Development of a Marginal Abatement Cost (MAC) curve for the Moroccan economy

√ An analysis of barriers to implementation of different mitigation options (including

technical, institutional and financial barriers)

√ Proposal of mitigation targets (technical and/or financial contributions to this study

may be provided from ongoing projects, such as the TNC and LECB, as well as other

initiatives such as the World Bank’s Energy Sector Management Assistance Programme

(ESMAP))

√ Development of a detailed overview of existing policies and their interactions

√ Identification of different possible mitigation instruments in Morocco (carbon pricing:

crediting, emissions trading, taxes; or other policy instruments such as fiscal incentives

and/or regulatory measures)

√ Analysis of the impact on emissions and cost to sectors of implementation of different

mitigation instruments. These will cover different scenarios in different sectors, including

the three covered by the MRP, considering how different policies interact. A simple Excel

model based on bottom-up assumptions will be used

√ Assessment of the interaction of such mitigation instruments with selected instruments

in place or planned domestically and internationally (e.g., the CDM, the EU ETS, the

NMM), including carbon leakage risks and potential synergies

√ Analysis of elements and components that can inform the establishment of an

institutional (governance) framework on issues relating to the carbon market

√ Recommendations on the implementation of a MBI (instrument type, structure,

governance), in line with other mitigation instruments. These recommendations will take

into account the lessons learnt with the CDM

√ Consultation, training and stakeholder engagement workshops, with contributions from

international experts

√ Workshops presenting the results of the study

Deliverables

A study with the following results:

- A MAC curve for the national economy

- Analysis and recommendation on which instruments to implement, for each

sector, with a focus on the three sectors covered by the MRP

A proposal for an appropriate government framework

Estimated budget

(USD) 600,000

Entity responsible Deputy ministry to the Minister of Energy, Mining, Water and Environment, in charge of

the Environment (MdE)/DPCC, Ministry of Finance (MEF) and PMU-PMR

Schedule Duration: 18 months (interim results after 6 and 12 months)

Timeline: Q3 2015 – Q4 2016


34

Activity 2 Mid-term review

To be implemented in the period 2015-2017, as part of a first tranche of PMR funding

Activity objectives

This objective of this activity is to review the progress of Morocco’s preparation for MBIs

in general and the implementation of a sectoral crediting mechanism in particular, as well

as to prepare a second request for a PMR grant. It will be important to assess the

progress in light of national and international developments, particularly the demand for

carbon credits, in order to plan for the coming years in terms of activities and funding.

Activity description

√ Review of the results of implemented activities

√ Review of the evolution of the national and international context, particularly of the

demand for carbon credits and its impact on Morocco’s preparation strategy for MBIs

√ Definition of a detailed roadmap for the next MBIs preparation and implementation

stages in Morocco

√ Evaluation of financial needs for the implementation of the roadmap

Deliverables

Workshops

Review report

New funding request to PMR

Estimated budget

(USD) 150,000

Entity responsible MdE/DPCC, MEF and PMU-PMR

Schedule Duration: 3 months

Timeline: Q2 2016

2.2 Rationale for the selection of sectors

In order to better prepare Morocco for the implementation of an MBI, it is important to initially focus

efforts on a few specific sectors via a pilot scheme, and to then share the lessons learned with other

sectors in a second phase.

The identification of the sectors to be covered by the MRP was made in consultation with various

national stakeholders during the development of firstly the PMR Organising Framework and then that

of the MRP. While preparing the Organising Framework eight sectors were identified. The evaluation

and selection of the three sectors out of those eight to be covered by the MRP were guided by the

criteria presented in Table 3. These criteria are based on the MRP guidance documents prepared by

the PMR Secretariat28.

28 World Bank (2012a)


35

Table 3 Selection criteria for sectors to be covered by the MRP

Selection criteria Description

Mitigation potential The sector has a significant mitigation potential

Non-GHG sustainable

development benefits

Implementation of GHG mitigation measures in the sector offer sustainable

development co-benefits as well as GHG emissions reductions, such as a reduction in

energy, water and raw materials consumption, reduced air pollution and job creation

National sectoral

experience with MBIs

It is possible to use the experience and lessons learned from previous sector

participation in existing MBIs, such as the CDM or the voluntary carbon market

International experience

to build upon

Lessons learned from other international emissions reduction schemes applied to the

sector internationally can be applied in Morocco

MBIs compared to other

alternative approaches

An MBI is likely to be the most appropriate way to reduce emissions within the sector,

compared to other possible approaches such as emission standards, financial

incentives or capacity building

MRV experience It is possible to apply experiences and lessons learned by the sector in relation to MRV

to other sectors

Concentration of actors

and focal points

Actors in the sector are concentrated and few, and/or the sector is centrally organised

(e.g., there is a sector association and/or a focal point representing the whole sector)

Lessons learned that would

be applicable to MBI

development in other

sectors

Carbon market development efforts in the sector can contribute to market readiness

and development of MBIs in other sectors

Other policies/initiatives

covering these sectors

Initiatives other than the PMR and/or policies are already covering mitigation efforts

and activities to build readiness for the development of MBIs in the sector

Analysis of each sector is discussed in detail in sections 2.2.1 to 2.2.6 and is summarised in Table 4.

For each selection criterion, a binary score was attributed for each sector. A ‘' sign indicates that the

criterion is not relevant or not applicable, and a ‘’ indicates that the criterion is relevant and/or

applicable.


36

Table 4 Evaluation table and sector selection

Selection criteria Electricity Cement Phosphates Commercial

buildings Transport Waste Agriculture Forestry

Mitigation potential

Non-GHG sustainable development

benefits

National/sectoral experience with

MBIs

International experience to build

upon

MBIs compared to other alternative

approaches

MRV experience

Concentration of actors and focal

points

Lessons learned that would be

applicable to MBI development in

other sectors

Other initiatives/policies covering

the sectors

Evaluation result Included in the MRP Candidates for a second

PMR grant

Other initiatives underway/more

appropriate than the PMR


37

This evaluation shows that while all sectors have mitigation potential (see Figure 6) and sustainable

development benefits beyond GHG emission reductions, the electricity generation, cement, and

phosphates sectors also possess all the other necessary elements for the implementation of an MBI.

As a result they have been selected for inclusion in the first PMR grant. Energy efficiency in

commercial buildings and transport show promise for MBI development in the future, and will be able

to benefit from the experience gained during the first phase of the PMR. They are not a main focus of

this MRP but could be considered for a possible second round of PMR funding. Finally, the waste

sector is already largely covered by an MBI (a CDM PoA), the forestry sector is already covered by the

REDD mechanism, which has a market-based element known as REDD+, and the agriculture sector is

better suited to approaches that are not market-based. These three sectors are therefore not included

in this MRP.

Figure 6 Mitigation potential by 2030 (Source: Royaume du Maroc, 2012)

In sections 2.2.1 to 2.2.6 below, the main features of each of these eight sectors are described,

expanding on the evaluation presented in Table 4. Building Blocks 3 and 4 of the MRP will then focus

on the first three sectors chosen for the first phase of preparation for the new MBIs (electricity,

cement, and phosphates).

2.2.1 Electricity generation

General context. Electricity generation is one of the key sectors in the new national energy strategy

of Morocco. Given the country’s strong energy import dependence of about 96%, and rising

international energy prices, the energy bill puts a fair amount of pressure on the annual budget and

has more than quadrupled between 2002 and 2011 to reach 10 billion dollars.29 At the same time,

subsidies to the energy sector have reached USD 5 billion for petroleum products only. Morocco wants

to reduce its energy dependence and increase energy security, especially with the expected fast

growth of the economy and continuously growing energy demand. The new national energy strategy

therefore sets out measures and policies aiming to diversify the energy supply and reduce the

country’s dependence on energy imports. This does not only include the exploration of oil and the

expansion of gas use, but also the expansion of renewable energies and energy efficiency measures.

To support the implementation of the energy strategy, the Energy Development Fund (FDE) was

created in 2009 and received an allocation of MAD 1 billion from national and international sources.

29 MEMEE (2012a). Exchange rate used: MAD 1 = USD 0.1218

3%

4%

14%

67%

7%

4% 1%

Total 57.6 MtCO2/year

Transport

Buildings

Industry

Electricity generation

Waste

Agriculture

Forests


38

The FDE is managed by the Société d’Investissements Énergétiques (SIE), a public limited liability

company with the purpose of investing in projects aiming at enhancing energy production capacity.

The Fund has the objective of enhancing and maintaining energy production capacities for the

financial support of public or private operators in renewable energy and energy efficiency. Activity 1

of the MRP will review the interaction between the energy strategy and m

partnership for market readiness - the pmr maroc mrp_02... · 1.2 energy profile 15 1.3 historic...

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