Green Hydrogen market in Morocco: needs and barriers
Morocco has chosen green hydrogen as an energy source of the future that will enable it to differentiate itself from its competitors. The country's meteorological conditions are highly favourable for it, reflecting its potential to generate renewable energy. However, water stress and difficult market entry is an unavoidable challenge for the successful development of the market.
- Significant renewable investment needs
- Water scarcity
- The need for adaptation in the framework of public policies
- Entry barriers to deployment and production in Morocco
- Local regulatory framework
- Regulatory framework (global)
- Barriers to export to the EU
Despite Morocco's credible option as one of the main producers of green hydrogen and its by-products in the near future thanks to its great potential to generate renewable energies, the North African country needs to overcome some obstacles and meet some specific needs for the successful development of the hydrogen market.
Significant renewable investment needs
According to the Moroccan Green Hydrogen Roadmap, the development of this industry in Morocco would require an investment of 76 billion dollars between 2020 and 2050, including renewable energy generation, electrolysers and conversion plants.
One should not lose sight of the investments needed in the infrastructures associated with the production, transport and export of green hydrogen, namely dedicated gas pipelines, green hydrogen refuelling stations, storage facilities for green hydrogen and derivatives, as well as the adaptation of port platforms for its export.
Water scarcity
Morocco ranks 22nd in the national water stress ranking of the World Resources Institute (WRI), which means that the country is naturally short of this resource necessary for hydrogen production. According to World Bank data, the agricultural sector, which accounts for 14% of Morocco's GDP, is the largest consumer of water, accounting for almost 88% of total demand.
The need for adaptation in the framework of public policies
These large investments in green hydrogen production and transport infrastructures should be largely financed by the private sector. To facilitate these investments, the government would need to finalise its gas policy and regulatory framework and extend them to green hydrogen.
Morocco has signed several trade and investment agreements with countries around the world, including free trade agreements with the European Union and the United States, which can facilitate the export of green hydrogen produced in Morocco.
Entry barriers to deployment and production in Morocco
Currently, there are no specific tariff barriers in Morocco affecting the production and sale of green hydrogen. Support tools are available to companies wishing to invest and/or set up in the country for production.
However, there are some non-tariff barriers that may affect the production and sale of green hydrogen in Morocco, such as the lack of adequate infrastructure to produce, store and transport large quantities of green hydrogen. This can increase production costs and limit the export capacity of producers.
Local regulatory framework
Morocco currently lacks a comprehensive regulatory regime or specific regulations that address and accommodate hydrogen-related issues, which is common in most jurisdictions in the region.
Hydrogen production facilities can be classified as "major hazard installations" due to the storage and handling of large quantities of hazardous materials, which entails strict safety requirements, reporting, licensing and specific authorisations from various competent authorities.
Electricity production for green hydrogen projects may be governed by Law 13-09 on renewable energies, with declaration and authorisation regimes depending on installed capacity.
Some hydrogen production projects are structured under the energy self-consumption scheme, especially if the same developer is a producer of both energy and hydrogen.
If the renewable energy plant is not on the same site as the hydrogen production plant, connection to the national grid will be required to transport electricity to the hydrogen production site.
Ensuring a sufficient volume of water of adequate quality for electrolysis is a key challenge. The use of water, depending on its source, may require authorisation or concession, and the construction of a desalination plant may be necessary.
Hydrogen transport and storage are subject to various laws and regulations. Morocco does not have a hydrogen pipeline network, and the natural gas network is limited.
The current regulatory framework for hydrogen exports in both Morocco and the country of destination needs to be understood. The largest natural gas pipeline network in Morocco, the Maghreb Europe Gas Pipeline (GME), could offer a viable route for transport to Spain, with modifications.
Regulatory framework (global)
Standard setting is a long and tedious process, and currently, most regulatory activity has focused on establishing the parameters for defining and certifying low-emission hydrogen in order to develop standards and certification systems.
The problem lies in the lack of consensus on whether nuclear and low-emission hydrogen should be treated equally.
The International Energy Agency (IEA) has recently published a regulation with new recommendations for producing hydrogen; it considers blue hydrogen based on fossil fuels to be clean because it keeps emissions below the 7 kilogram limit.
Barriers to export to the EU
The European Commission has adopted two Delegated Acts under the Renewable Energy Sources Directive that play a key role in the decarbonisation of industry and heavy transport.
These acts set out detailed rules for defining renewable hydrogen in the EU and are part of a broader framework that includes investments in energy infrastructure, state aid regulations and legislative targets for renewable hydrogen in industry and transport.
The first Delegated Act defines the conditions under which hydrogen, hydrogen-based fuels and other energy carriers can be considered renewable fuels of non-biological origin.
The second Delegated Act establishes a methodology for calculating the life-cycle greenhouse gas emissions of renewable non-biological fuels from source to final consumer.
The Carbon Border Adjustment Mechanism (CBAM) is an EU initiative designed to address the risk of "carbon leakage". This risk refers to the possibility of companies moving production to regions with laxer climate regulations, thereby avoiding the costs associated with carbon emissions and undermining the EU's climate targets.
The SET Roadmap, or Sustainable Electricity Trade Pathway, is a commitment made by five countries: France, Germany, Morocco, Portugal and Spain. This commitment was established during COP22 in Marrakech in 2016.
The aim of the SET Roadmap is to open up the renewable energy markets of these countries to each other. This involves the removal of barriers, both physical and commercial, to facilitate collaboration and the exchange of green electricity across borders.