Morocco's Decarbonization Pathway - Part III: The Costs and Benefits of the Energy Transition

Morocco's significant renewable energy resources offer an unprecedented opportunity to anchor the country’s economic and political choices in the energy transition, and to turn the transition into an essential lever for economic development. This is all the more relevant as the costs of renewable energies have dropped over the past 10 years2, and now offer strong potential, not only for creating green jobs but for ensuring a dynamic and resilient economic growth as well. In 2020, nearly 20% of Morocco's electricity production was provided by renewable energy resources (RES), while the installed capacity of RES was around 36%. Morocco's ambition is to reach a target of 52% of installed RES capacity by 2030, reinforcing the country's commitment to energy transition and decarbonization. However, this transition must also be sustainable from a socio-economic point of view and must ensure that ‘no one is left behind’. It is, therefore, necessary to quantify the costs and benefits of the energy transition, in order to identify the right policy approaches and mitigate the potential negative effects of the transition on growth, particularly in terms of industrial competitiveness, employment, and citizens' purchasing power. This third Policy Brief in the series presents the results of a cost-benefit analysis, performed to identify the technological levers of the energy transition in Morocco, and to estimate the global economic benefit of modeled scenarios presented in Part II, both at national and sectoral levels. The full economic cost of the decarbonization scenarios, over the 2020-2050 period, is calculated as the sum of direct system costs and social costs of carbon. Direct system costs include system expenditures (CAPEX4, OPEX5, commodity costs, and taxes), including infrastructure cost, and are calculated based on a levelized cost of electricity (LCOE)6 analysis for each technology. The social cost of carbon represents the implicit cost of carbon emissions, factoring in multiple impacts on the system, including social and health costs. The social cost of carbon adopted in this study is based on the 2016 U.S. Environmental Protection Agency report7 adjusted to 2019 monetary values. It has also been re-proportioned to a discount rate of 2.35%, in line with direct cost actualization. Generally speaking, the scenario with the lowest full economic cost produces the greatest global economic benefits to the system.