Morocco's recent approval of six green hydrogen projects under its offer, totaling approximately $32.5 billion, underscores its ambition to position itself as a leader in sustainable energy production within Africa and the Mediterranean region. While this progress is commendable, Morocco’s green hydrogen offer update reveals several challenges and considerations including the lack of details regarding project timelines and designated offtakers, as well as the vision for positioning Morocco not merely as an exporter of commodities but as a leader in industrial value chains. Addressing these omissions is crucial for ensuring projects’ transparency and maximizing the socio-economic benefits for Morocco and for local communities.
Economic viability and global context
The global green hydrogen sector has encountered significant hurdles, primarily due to high production costs and infrastructure challenges. For instance, in Australia, nearly 61 out of almost 100 proposed hydrogen projects have been either scrapped or put on hold, largely because of economic and logistical issues. These examples highlight the financial risks associated with large-scale green hydrogen ventures. Moreover, a study from Harvard University indicates that the cost of producing, transporting, and storing green hydrogen remains higher than utilizing fossil fuels combined with carbon capture and storage. This economic disparity raises concerns about the competitiveness of green hydrogen in the current energy market.
While the Moroccan approach is pragmatic in the sense that it does not rely at all on public resources to concretise these projects (according to Minister Leila Benali), this should not compromise the imperative for Morocco’s national economic and financial ecosystem including institutions and the government to actively engage in shaping market dynamics. This is especially important because investors may also benefit, under the Morocco Offer and in accordance with the conditions defined by current legislation, from tax and customs incentives, including exemptions from import duties and value-added tax on goods acquired domestically or imported. In addition, there are benefits such as land acquisition and other advantages outlined in the new investment charter (e.g., grants). However, this raises questions about the impact of these projects on the Moroccan economy. To maximize its national benefits, Morocco must challenge economic models, including but not limited to securing the most competitive price per kilogram of green hydrogen, and ensure that the country leverages its strategic advantages to drive its economic growth and industrial competitiveness in emerging sectors.
The Importance of transparency, timelines and offtakers
Providing clear timelines for each project phase, from planning and construction to operation, is essential for setting realistic expectations and facilitating stakeholder engagement. While the recent announcement concerns only the selected projects after initial negotiations, these projects must still progress through several predefined steps under the Morocco Offer framework. This includes conducting necessary studies such as the Pre Front End Engineering Design (PREFEED) and Front-End Engineering Design (FEED), engaging in negotiations with relevant authorities, and ultimately reaching a Final Investment Decision (FID). Given these steps, projects may encounter obstacles that could hinder their realization. Additionally, transparency about offtakers—entities that will purchase the produced hydrogen or its derivatives is crucial, as securing an offtaker is often a prerequisite for financiers and investors to grant credit. At this stage, it remains unclear whether these projects have secured offtakers, making it even more important to enhance communication about their current status. Such transparency not only builds trust among investors and the public but also aligns with best practices in project management and governance.
Ensuring positive benefits for Morocco and local communities
To fully harness the potential of the selected green hydrogen projects under Morocco’s offer, it is imperative to focus on generating positive benefits, particularly in the following areas:
Capacity building and workforce development
Educational Initiatives: integrate green hydrogen technologies into academic curricula at universities, engineering schools and technical institutes to cultivate a skilled workforce.
Training programs: establish vocational training centers specializing in green hydrogen technologies to equip local communities with relevant skills to boost employment.
Research and Development (R&D) and Deployment
Innovation Hubs: enhance existing national and regional research centers led by the Research Institute for Solar Energy and New Energies (IRESEN) dedicated to advancing green hydrogen technologies, fostering innovation, and attracting Moroccan global talent.
Public-Private Partnerships: encourage collaborations between government entities, academic institutions, and private companies to drive research initiatives and technological advancements, including via industrial clusters.
Piloting for Value Add: innovation hubs and industrial clusters can help to support Morocco’s position in global value chains, including deployment of hydrogen and derivatives in Morocco’s green industry as well as supporting its role as a hub for maritime decarbonization.
Community engagement and benefits
Local hiring: To maximize the benefits of Morocco’s future green hydrogen projects, it is essential to prioritize local employment by hiring from nearby communities for both the construction and operational phases, fostering job creation and economic growth.
Local infrastructure development: Simultaneously, investing in local infrastructure, including roads and communication networks, will not only support the successful implementation of these projects but also enhance the overall living standards of the surrounding populations.
Environmental protection: Additionally, environmental conservation and sustainability must be a key priority, ensuring that project development does not compromise local ecosystems and that sustainable practices are integrated into every stage of implementation.
Additional recommendations for the Moroccan Government
To enhance transparency and ensure that the green hydrogen initiatives yield substantial benefits for Morocco and its communities, the government should consider the following actions:
Public disclosure: release detailed project plans, including timelines, offtakers, and expected socio-economic impacts, to inform and engage the public.
Stakeholder consultations: conduct regular dialogues with local communities, industry experts, and civil society organizations to gather input and address concerns.
Monitoring and evaluation: establish mechanisms to monitor project progress and assess socio-economic and environmental impacts, ensuring accountability and continuous improvement.
Raising awareness: Launch public awareness campaigns to inform communities about the benefits and challenges of green hydrogen and its derivatives , the role it plays, and how they can contribute to the success of these initiatives, as well as benefit from them, including economic opportunities, job creation, and environmental challenges.
Planning for local benefits: Sustainable development extends beyond climate and macroeconomic factors; it must prioritize social considerations. The Green Hydrogen Offer should be locally anchored in regionalized local benefit plans to ensure tangible benefits for local communities and, more broadly, for Morocco.