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The Mediterranean Region: Microcosm of Global Green Recovery. How does the Carbon Border Adjustment Mechanism fit in?

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Mar 17, 2021 / 0 Comments
Photo Credit: World Bank

The world is now at a crossroads: should recovery from the economic crisis triggered by COVID-19 be a series of individual go-it-alone country efforts, or instead an internationally cooperative effort? Should the fight to avert the climate crisis be about what each of us does, or instead about what all of us do together? Much of that decision-making revolves around what developed countries will do vis-a-vis what developing countries will do.


Around the Mediterranean there are 22 countries spread across the African, Asian, and European continents. Some of them are advanced economies, others are emerging. The Mediterranean is a microcosm of that very crossroads the world is facing, and what happens here can create a strong demonstration effect – positive or negative – for what will happen elsewhere. The world should be watching.


The EU has determined that its new Green Deal will shape its recovery from the economic crisis. It will drive demand, and it will transform the structure of supply, in the European economies, driving green technology forward in its development for the future and its cost-competitiveness. It will have a profound influence on the EU’s comparative position in the future world economy, and in its contribution to combatting climate change. The Green Deal is structured to enable a very cooperative endeavor between EU countries, for the recovery and to avert the climate crisis.


But will this cooperative approach be extended to the Southern and Eastern Mediterranean countries? To create a more global approach. This could happen in so many ways.


Europe could ensure that its carbon border adjustment mechanism (CBAM) helps industry on the South and Eastern shores of the Mediterranean to actually adjust. CBAM is intended to tax embedded carbon in imports from outside the EU, so that they can be on a level playing field with production inside the EU and subject to the emissions trading system (in other words, to a form of domestic carbon taxation). Therefore, the imposition of CBAM will require production outside the EU to decarbonize if it is to compete in EU markets. That will require cooperation, planning, and transitional financing in order not to be economically disruptive for the exporting Southern and Eastern Mediterranean countries. 


As recently as March 11th, 2021, the European Parliament adopted a resolution emphasizing the role of CBAM as an EU instrument to promote global standard setting on sustainable development and alignment with the Paris Agreement, offering support to countries trying to adjust to CBAM, and particularly acknowledging the importance of early engagement with countries in the EU neighborhood.


In addition to actions directly related to CBAM, a cooperative approach by Europe could enable regulatory harmony and market openness by including energy and decarbonization related issues in  deep and comprehensive free trade agreements with Southern and Eastern Mediterranean countries[1]. Europe could source much of its huge green energy needs from the deserts of Mediterranean MENA. Europe could also provide much-needed recovery financing and climate financing to the Southern and Eastern Mediterranean countries. All of that would help create much-needed jobs in the Southern and Eastern Mediterranean, enabling people to earn a living and keep families together.


It would enable the Eastern and Southern Mediterranean to fully contribute to the economic recovery and to combatting the greatest challenge of our lifetimes: climate change. And to fully participate in the transformational green technology revolution that accompanies it. Inspiring cooperative action elsewhere in the world.



[1] For further discussion of this issue, see Moreno-Dodson, Blanca, Enhancing Mediterranean Integration, 2020. Available at

Dr. Silvia Pariente-David

Silvia Pariente-David is an international energy consultant and a Senior Advisor to the World Bank. She helped create the CMI Forum on Energy and Climate Change. Dr Pariente-David has 40 years of experience in managerial positions in financing, advisory and consulting activities in the fields of energy project evaluation, energy market analysis, regional energy market integration and climate policy assessment. Throughout her career, she has thrived to promote regional energy market integration, be it the EU Single Market, the Common Maghreb energy market or the nascent Euro-Mediterranean energy market. While a Senior Energy Specialist at the World Bank, Dr Pariente-David was one of the leaders of the MENA CSP scale-up program, funded by a $750 million grant from the Clean Technology Fund, and the Task Team Leader for the first project under that program, the Noor-Ouarzazate plant in Morocco.  


Jonathan Walters

Jonathan Walters is an independent economist specializing in the integration of the Arab and Mediterranean world, with a strong interest in renewable energy and in trade.  He is a former World Bank Director of Regional Programs in MENA, and has worked on the region for more than 15 years. Mr. Walters initiated the $6 billion scale up of solar power in MENA, led by the World Bank, and financed by the Climate Investment Funds under PPP arrangements, with the ultimate objective of negotiating access to the EU market for green energy to enable both sides of the Mediterranean to benefit from MENA’s comparative advantage, and the world to benefit from cheaper dispatchable solar energy. He is a Senior Visiting Fellow of the Oxford Institute of Energy Studies and a Senior Associate of E3G (the Climate Change think tank).



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