By Edward Acquah
Accra, May 27, GNA- As the world races to transition from fossil fuel to renewable energy, Ghana has developed a National Energy Transition Framework (2022-2070) to decarbonise the energy sector to help achieve net zero targets as part of commitments under the Paris Agreement.
The country has set out an ambitious target of 2070 to fully transition from fossil fuels to renewable energy.
Ghana’s Ministry of Energy estimates that the implementation of the plan would cost the country about US$561.8 billion in the next five decades.
The Government has repeatedly declared its commitment to meet the transition targets as part of a long-term roadmap for achieving universal energy access and net-zero carbon emissions, as expressed under the country’s Nationally Determined Contributions.
The transition framework balances existing efforts with new initiatives to increase renewable energy penetration, convert thermal plants to natural gas, and integrate nuclear power into the energy mix.
Rationale for transition.
As part of the Paris Agreement on Climate Change, countries around the world have expressed commitment to reduce their greenhouse gas emissions to ‘net zero’ by around 2050 – and the transition to renewable energy has been identified as the way to go.
More than 80 per cent of the world’s energy is produced by burning coal, oil and gas, which release billions of tonnes of carbon dioxide and are the biggest driver of climate change.
According to the United Nations, at least $4 trillion a year needs to be invested in renewable energy until 2030 – including investments in technology and infrastructure – to reach net-zero emissions by 2050.
The UN said a reduction of pollution and climate impact alone could save the world up to $4.2 trillion per year by 2030.
As of 2022, hydro accounted for 38 per cent of Ghana’s energy generation portfolio while thermal accounted for 60 per cent (making it the baseload). Solar and biomas contributed one per cent each to the energy mix.
Currently, about 70 per cent of Ghana’s generation installed capacity of 5,321MW is from a thermal plant that uses natural gas as its primary fuel.
Scope of framework
Ghana’s energy transition plan identifies energy and transportation sectors as key areas in reducing emissions.
The country is also envisaging future investments in renewable energy by exploiting and adding value to its green energy resources such as lithium, which has become an essential commodity in the electric vehicle market.
The Energy Transition Framework envisages meeting future electricity demand of 380,000GWh with an installed capacity of 83GW.
The Ministry of Energy envisages that the projected diversified energy mix shall include 21GW of renewable energy and provide an opportunity to commercialise the renewable energy carbon credit.
By investing in renewable energy, the Ministry has also targeted lower electricity generation costs below 4.5 cents/kwh and mitigate 200MtCO2-eq of greenhouse gas emissions.
The framework also seeks to scale up the adoption of clean cooking fuels and technologies by distributing subsidised improved cookstoves to women especially those in rural communities who heavily rely on firewood.
A full-scale implementation of the energy transition framework is expected to generate more than 1.4 million new job opportunities due to the introduction of new technologies such as Carbon Capture Utilization and Storage, Nuclear Power, Hydrogen, EV charging stations, Clean Cooking Stoves among other innovations along the value chain.
Key targets under the framework
By 2030, the energy transition framework targets the electrification of more than 95 per cent of households; introduce a Compressed Natural Gas (CNG)-fuelled Internal Combustion Engines and trains; 10 per cent of electricity generation capacity is renewable energy, and 10 per cent ethanol blend in major petroleum products.
By 2040, Ghana intends to scale up nuclear power in the electricity generation mix; adopt carbon capture, usage and storage (CCUS) for electricity generation, Oil and Gas and Industries; introduce sustainable aviation fuel (Biofuel for aviation kerosene), and phase out fossil liquid fuel for electricity generation.
The key targets for 2050 include more than 50 per cent of water heating systems being solar heaters; more than 50 per cent of metro urban households using electric stoves, and more than 70 per cent of road vehicles being electricity and hydrogen-fuelled.
By 2070, the country envisages that more than 70per cent of rural households use LPG for cooking; all road and rail mobilities are electricity and hydrogen-fuelled, and 20 per cent of electricity generation capacity is renewable energy.
The projected net cashflows for the oil and gas sectors are estimated at US$35 billion and US$1.3 billion respectively. Electricity sales are expected to increase during the transition with sales revenue rising to about US$140 billion in 2070 representing 16 per cent of the country’s GDP.
Progress of implementation
The implementation of Ghana’s energy transition framework commenced with the establishment of the National Energy Transition Implementation Committee, and the National Energy Transition Coordinating Office to drive the implementation of the plan.
The key institutions responsible for the implementation of the framework are the Ministry of Energy, the Ministry of Transport, and the Ministry of Environment, Science, Technology and Innovation.
In an interview with the Ghana News Agency, Dr Robert Sogbadji, the Deputy Director of Power, Ministry of Energy, said the framework would be implemented progressively, adding that the 2070 transition target was feasible.
He said the government would also create an enabling environment for private sector participation to raise the needed capital to execute key projects under the framework in various sectors.
Concerns
Meanwhile, some energy analysts and enthusiasts have urged Ghana to hasten slowly on the switch to renewable energy, cautioning that the non-utilisation of the country’s petroleum resources would have dire consequences on the economy.
Data from the National Petroleum Authority indicates that the petroleum downstream industry with an annual sales value of about GHS32.94 billion according to 2021 estimates, contributes 7.2 per cent of the country’s GDP.
The figure represents a 41 per cent increase in demand for fossil fuels as compared to 2020 – and represented a surge in annual consumption of fossil fuels which stood between 5 per cent and 7 per cent over the years.
Speaking at the 2022 Ghana International Petroleum Conference (GhIPCon) in Accra in September 2022, Vice President Dr Mahumudu Bawumia said natural gas would continue to be part of Ghana’s energy mix in the short term as the country takes steps to fully transition from fossil fuels to renewable energy by 2070.
The Vice President said as much as the government was committed to achieving net zero carbon emissions by 2070, the country must strike a balance in the context of its social, economic, and environmental requirements in the transition process.
“So, even though as a government, we are fully committed to achieving net zero carbon emissions by 2070, we also have to take steps to accelerate the production and utilisation of our oil and gas reserves,” Dr Bawumia said.
Way forward
As much as the transition from fossil fuel to clean energy will boost global efforts to reduce greenhouse gas emissions, it is envisaged that the energy transition process would affect the demand for energy and the downstream industries that rely on the production and use of fossil fuels.
The transition may also lead to increased investment in renewable energy and the development of new technologies for the transportation and storage of energy.
It is, therefore, crucial for players in the downstream sector on the African continent to focus on innovation and diversification in order to thrive and mitigate the impact of the transition.
Players and policymakers in the sector should also pay attention to the long-term implications of the transition and prepare for opportunities that may arise along the renewable energy value chain.
GNA