Green Partnership Agreements – How They Advance the EU Green Deal and Strengthen EU Relations with its Southern Neighborhood

The European Green Deal was put forward by the European Commission in 2019 with the ambitious aim of making Europe the first carbon-neutral continent worldwide by 2050. For the deal’s external dimension, the EU seeks to strategically cooperate with its neighbors through bilateral and regional partnerships for green transformations.

This external dimension has increased in importance with the Russian invasion of Ukraine in February 2022. Since then, the urgency of energy security has intensified. The EU has started to work out plans to lessen its dependence on Russian fossil fuels while furthering its green energy transition. Taking a closer look at Morocco, we inquire what green partnership agreements need to include to be mutually beneficial.

The strategic importance of the southern neighborhood

As part of this plan to diversify the EU energy supply and restructure value and logistic chains, the southern neighborhood has increased in importance due to its strategic position, proximity, and potential for green energy production. Given this, a landmark Green Partnership Agreement was agreed upon between the EU and Morocco in October 2022. This can encourage similar bilateral engagements in the future and become a bridge between the continents as it has the potential to extend cooperation in the external dimension of the Green Deal.

A central aspect of the partnership is that the EU not only benefits from the production of and import of carbon-neutral energy sources from Morocco but that renewable energy is also available to Morocco’s industries and agriculture. These sectors become more climate-neutral, jobs are created and higher taxes are generated for the state, while Morocco can position itself more competitively. Thus, EU textile and automotive production outsourced to Morocco can be produced locally in a more resource-efficient way, benefitting both Morocco and the EU.

Imports from Morocco to the EU accordingly become more climate-friendly. As seen in the figure below, unemployment is high in the EU’s Southern Neighborhood, and job creation in Morocco benefits both partners.

To engage with its neighbors effectively, the EU requires a unified strategy and must ensure that partnerships account for partner countries’ climate threats while helping them reap the benefits of a green transition. To show partners that the EU understands their needs, a clear and strong EU positioning on the advantages of green development is important.

Furthermore, the EU needs internal coherence on green transitioning and partnerships to work effectively. To achieve this, internal emphasis on European sovereignty in its green partnerships is essential to gain the support from member states expressing doubts about social and economic consequences.

One more step along the path of EU-Morocco relations

The agreement between the EU and Morocco is building on past cooperation. The problem of climate change was already mentioned in the EU-Moroccan joint declaration of 2019. In addition, Morocco is one of the EU’s main beneficiaries in terms of funding in the southern neighborhood and is part of the Economic and Investment Plan of the New Agenda for the Mediterranean. Furthermore, bilateral agreements, for instance, the German-Moroccan Energy Partnership PAREMA, preceded EU green-energy cooperation with its neighbors.

Private-sector investments play an important role in the green transition

For the partnership to be more effective, EU financing in the southern neighborhood is essential. Compared to its North-African neighbors, Morocco has a strong private sector, but especially small- and medium-sized enterprises face difficulties. This sector’s importance stems from the fact that it puts EU regulations into practice and creates jobs. To increase confidence in investing, an important aspect is to de-risk private green investments, for instance, by using EU public guarantees.

Focusing on EU- and individual member-state investments in Morocco, German investments in Morocco, for instance, are growing, and German companies have created 35,000 jobs. However, greenfield investments remain a challenge as there is a problem in accessing finance and a need for better targeting.

There is a high share of renewable energy in EU greenfield investment projects, which increased from 6.5% to 18.3% in the EU’s Southern Neighborhood. A focus on making investments safer for both sides of the partnership is therefore important.

The European private sector’s pressure to become climate-neutral also means that it has already taken steps to make its supply chains greener and take advantage of raw materials in the southern neighborhood. The external dimension of the Green Deal has the potential to make sure companies do not exploit the neighborhood’s resources or slow down neighbors’ own green transitioning.

Tunisia and Egypt as potential partners for future green Partnerships

The EU agreement with Morocco is just the start of green partnerships with North African countries. Potential prospective green partners are numerous, with Tunisia and Egypt being auspicious as they promise to fulfil preconditions of EU green partnerships, such as favorable laws, climate ambitions, and green energy potential.

Tunisia shows potential in renewable energy, especially in green hydrogen. The country’s laws are favorable to producing green energy, and it offers plans to reduce emission intensity by 41% by 2030. A close partnership with the EU and existing energy infrastructure makes Tunisia attractive for future cooperation.

With EU funding, Tunisia’s problems concerning administrative, and material means in its General Authority of Energy Transition could be overcome. With financial and technical assistance through a green partnership, Tunisia could be a promising partner to help the EU increase energy security while also securing Tunisia’s own energy security. As Tunisia does not have plentiful oil and gas reserves, a green partnership can help the country produce local, cheap and clean energy, also for its own use.

Egypt shows similar potential in that it tries to go Morocco’s path in terms of industrial development. The country has a high capacity in the green hydrogen sector and a history of cooperation with the EU, for instance, through the Trilateral Memorandum of Understanding of June 2022.

Chinese high-tech competition in the southern neighborhood

While the EU is extending its cooperation in green energy, international competition exists and could influence the EU’s future role in the green transition. To engage in green partnerships, the EU faces the challenge of outbidding investment competitors.

An important actor showing interest in North Africa is China, especially as part of its Belt and Road Initiative. While the country is involved in green energy, as it is, for instance, the main supplier of photovoltaic technology, its focus lies mostly on infrastructure projects, as is visible in the figure below.

The importance of green partnership agreements becomes clear when considering the share of high-tech imports to the EU’s southern neighborhood. While this share has increased for China, it decreased for the EU, as the figure below shows. Partnerships are an essential tool for the EU to ensure and extend its high-tech competitiveness.

This competition underscores the importance of EU cooperation with its southern neighbors. It is crucial that it acts fast and efficiently to benefit from the region’s potential in supporting the EU’s green transition and deepens and widens its cooperation with partner countries to stay competitive in the field of renewable energy and follow its Green Deal ambitions.

About the Authors:

Christian Hanelt is a Senior Expert for the EU Neighbourhood and the Middle East, working in the Bertelsmann Stiftung’s Program “Europe’s Future.” His areas of expertise include the Euro-Mediterranean Partnership, the Israeli-Arab conflict, the EU’s relations with the Gulf region, economic developments in the Arab world, and the causes of flight and migration.

Anneke Grosskreutz currently works as an intern for the Bertelsmann Stiftung, where she supports the Project “Sovereign Europe: Strategic Management of Global Interdependence”. She recently graduated from the University of Groningen, where she studied International Relations and International Organizations with a specialization in International Development Studies.

Read More on the EU’s Southern Neighborhood

Across the Mediterranean: New Perspectives for Old Neighbors

The EU and the Middle East: Exploring alternatives to Russian Energy

Putin’s War Raises Europe’s Costs in its Southern Neighbourhood