Morocco has committed to reducing its greenhouse gas emissions by 53% by 2035 compared to the “Business as usual” scenario, as part of its revised Nationally Determined Contribution (NDC 3.0). While notable progress has been made in climate planning and governance, this ambitious goal will require significant structural adjustments across budgetary, fiscal, and institutional areas.
According to Oussama Ritahi, a professor of economics at Hassan II University in Casablanca, the integration of climate objectives into the state budget programming represents a recent but crucial advancement. Since 2024, the NDC has been explicitly incorporated into the three-year budget cycle, while a climate unit has been established within the Ministry of Economy and Finance to ensure coherence between climate commitments and public policies. Sectoral projects must now integrate climate objectives, and mechanisms for “climate tagging” of public expenditures are being implemented.
However, to stay on track, investment needs remain considerable. The NDC 3.0 envisions nearly $96 billion in climate investments by 2035, primarily in electricity networks, renewable energy, and sustainable transportation. The Kingdom aims to triple the share of renewable energy and gradually phase out coal, with a scheduled exit by 2040. These directions imply a massive redeployment of public expenditures towards energy transition and adaptation, particularly in water, sustainable agriculture, and resilient infrastructure.
On the fiscal front, several instruments are expected to play a central role. The introduction of an explicit carbon tax, planned for 2025, is one of the main levers. Based on the “polluter pays” principle, it could generate revenues equivalent to nearly 0.8% of GDP while incentivizing emission reductions. However, this measure must be carefully calibrated to avoid excessive impacts on carbon-intensive industries and low-income households, necessitating targeted compensation mechanisms.
The reform of energy subsidies, which is already underway in Morocco, also aligns with this logic. Fuel and electricity subsidies have been nearly completely eliminated, while the butane subsidy, which is socially sensitive, remains. Continuing this reform is essential to create new budgetary margins while strengthening social protection measures to maintain social acceptance.
Simultaneously, green financing instruments are gaining importance. Green bank credits, supported by international partnerships, facilitate private investment in sustainable projects without directly impacting the state budget. Green bonds, of which Morocco was a pioneer in Africa, attract international capital and diversify funding sources for the transition, provided there is rigorous transparency to avoid any risk of “greenwashing.”
A significant portion of the climate effort, however, is contingent on international support. About 31.4% of the emission reductions anticipated in the NDC 3.0 depend on external funding, amounting to between $30 billion and $34 billion. While Morocco enjoys a favorable image with international donors and strong partnerships with major multilateral institutions, its absorption capacity remains a major challenge. Adaptation needs continue to be largely underfunded, despite progress in tracking and governance of climate flows.
Finally, the success of this trajectory relies on a robust governance framework and rigorous monitoring and evaluation mechanisms. National bodies dedicated to climate, supported by the climate unit of the Ministry of Finance, are expected to play a central role in aligning budgets, fiscal policies, and private financing with measurable results in emission reductions and climate resilience.
By 2035, the NDC 3.0 stands as a real-world test of Morocco’s ability to transform its climate commitments into effective public policies. While institutional foundations are being laid, the scale of necessary adjustments confirms that climate transition has become a major economic and budgetary issue for the Kingdom.