The European Union mechanism for adjusting carbon limits is revolutionizing industrial sustainability, and will certainly have an impact on companies in Morocco, which has moved to full speed in the field of industrial acceleration, as demonstrated by the draft finance law for the year 2024, which aims to lead important workshops related to establishing a tax. Carbon.
This mechanism, which was adopted at the beginning of last October as a transitional testing phase, represents a turning point in the business climate in Morocco, which, thanks to the upcoming carbon tax workshops, as well as the Kingdom’s economic partnerships and its strategic goals at the level of sustainability and renewable energies, provides great opportunities for the emergence of a green and open system. On the global economy.
According to the budget implementation and macroeconomic framing report for the three years (2024-2026), “the year 2024 will witness a study of enacting a carbon tax in Morocco in accordance with the provisions of Article 7 of Framework Law No. 19-69 related to fiscal reform.”
This report, published by the Ministry of Economy and Finance, indicates that imposing a carbon tax to maintain and enhance the competitiveness of Moroccan enterprises is among the government’s priorities in the 2024 budget, which is in line with the mechanism for adjusting carbon limits, which was launched with the aim of supporting global efforts to transition towards a green economy. In this context, Elias Sallali, a specialist in environmental law and sustainable development, considered that the entry into force of this customs duties project calls on Moroccan companies to make their industrial practices cleaner.
Indeed, this tax is in line with the requirements of the draft Finance Law 2024, which stipulates enhancing the sustainability of public finances. On the other hand, the government intends to continue tax reforms during the year 2024, especially with regard to value-added tax and activating the law related to the reform of public institutions and enterprises.
In this regard, Mr. Slali pointed out that “increasing the carbon tax and encouraging companies to increase their environmental investments could lead to an increase in costs for companies that emit large greenhouse gas emissions,” stressing the importance of preparing the Moroccan business environment for these changes. However, in the long term, these eco-investments will stimulate innovation and the development of products and services with low environmental impact, which would contribute to economic growth while reducing the industry’s overall carbon footprint, he stressed.
Carbon neutrality is certainly the future of the global economy, but setting a price on carbon emitted means an increase in production costs. Will companies be able to withstand, fairly, the competition from products manufactured in countries where pollution does not cost the same price? In this context, Mr. Al-Sallali stressed the need to take into account the initial costs associated with conformity and the transition towards cleaner technologies.
He explained, “It is necessary for the Moroccan government to develop policies to support enterprises in this transitional phase, including tax incentives and training programs, as well as financial support for research and development. These measures would help maintain the volume of production while enhancing sustainability.”
+ What about tax justice? +
This environmental legal tool constitutes an effective external driver for accelerating the energy transition in Europe and beyond, but the challenges of the carbon tax are shared by other existing environmental policies, in Morocco in particular, such that legalization disproportionately affects small businesses and low-income people, because these laws It could put pressure on industrial contracting costs, forcing them to spend more on green products.
The year 2024, according to the aforementioned report, will be devoted to developing the vision for the carbon tax in Morocco, by determining its scope as well as the conditions for its application in consultation with the relevant ministerial sectors, and through the technical support of international financial institutions. These measures will enable the size of companies and their sectors of activity to be taken into account. The expert noted, “From an environmental standpoint, a carbon tax would encourage Moroccan industrial sector companies to adopt cleaner technologies and improve their energy efficiency, which could include reducing waste, managing water more efficiently and preserving natural resources. This will contribute to achieving the goals.” National Council for Reducing Emissions and Combating Climate Change,” highlighting that fiscal justice in terms of carbon pricing remains a major concern.
According to Mr. Al-Sallali, not all companies are equal in terms of energy intensity, financial resources, or the ability to quickly reduce their emissions, because these companies differ greatly in terms of energy intensity. Some industries, such as steel or cement production, require large amounts of energy and may have high carbon emissions per unit of production, while other sectors, such as technology companies, may have a much lower carbon footprint.
In this regard, he considered that small enterprises may be more vulnerable to carbon pricing, because they often have limited financial resources to invest in clean technologies, calling for the creation of mechanisms to support them, such as establishing fair emission thresholds or exemptions for the benefit of small enterprises. The expert explained, “To improve fiscal justice, many countries are reinvesting carbon pricing revenues in social programs, or in incentivizing companies to reduce their emissions, or in direct refunds to families. This would help mitigate the disproportionate economic impact on vulnerable groups and promoting equitable reduction of emissions.”
In his opinion, the transition to a low-carbon economy could improve long-term economic stability by reducing dependence on non-renewable resources and mitigating risks associated with climate change.
He said, “International financial markets, in turn, are showing increasing interest in sustainable investments. Green bonds, socially responsible investment funds, and other financial instruments based on environmental impact are attracting more investors. Morocco can benefit from these trends to attract green investments.”
In order to promote these green and carbon-neutral investments, the expert recommended maintaining stable and predictable carbon pricing policies, in order to give confidence to investors in the long term, and facilitating cooperation between the government, companies and civil society to prepare joint policies and initiatives aimed at encouraging green investments, and regular re-evaluation. policies and incentives to ensure their continued effectiveness and adaptation to market developments. In fact, carbon pricing must be part of a comprehensive emissions mitigation strategy. In practice, using carbon pricing revenues could be a way to stimulate the economy and mitigate the economic damage resulting from the significant rise in fuel prices.