Strictly Personal

How Ghana can map its energy transition journey by Nafi Chinery

Published

1 year ago

April 11, 2022

All countries have a vital role and interest in avoiding catastrophic climate impacts and safeguarding a livable planet. Like the citizens of most developing countries, Ghanaians are increasingly affected by climate change, despite bearing little responsibility for the emissions that are causing it.

At the COP26 climate conference last year, governments reaffirmed their commitment to the goal of limiting global warming to 1.5°C. Achieving this will require a colossal and unprecedented shift away from fossil fuels to renewable energy sources like wind and solar — as well as the provision of clean, affordable and reliable energy for the nearly one billion people currently living without it.

The wealthiest countries that have polluted the most should hold the primary responsibility for tackling climate change, both in cutting their emissions first and fastest, and in providing climate finance and support to countries like Ghana. Ghana’s President Nana Akufo-Addo emphasised this responsibility during COP26 when he called for a fair and equitable solution that “recognises the historical imbalances between the high emitters and low emitters.”

To date, however, wealthy countries have under-promised and underdelivered. They have yet to reduce emissions to the extent necessary to avoid warming beyond 2°C, let alone 1.5°C. And, as President Akufo-Addo also mentioned, they have failed to honour their 2010 promise of $100 billion per year to support developing countries’ responses to climate change. Tragically, the consequences will be felt by all for decades to come.

Ghana’s agency in the energy transition

Despite this compound injustice and these broken promises, Ghana’s future ultimately depends on its own leadership and effective planning. Ghana is still a resource-dependent country, with more than a quarter of its export earnings coming from oil and gas alone. Over the past decade, the oil sector has contributed around $6.5 billion of direct revenue to Ghana’s budget. Without a plan to respond to the global energy transition, a significant decline in oil revenues could plunge Ghana into a deep crisis.

In the last decade, the government has allocated $2 billion to the Ghana National Petroleum Corporation (GNPC). These investments have financed equity stakes in exploration, development and general operations in oil-producing fields. NRGI’s Risky Bet report shows that, globally, oil and gas projects currently in the pipeline and worth an estimated $400 billion, run the risk of not breaking even.

At a minimum, the government should avoid making bad decisions — those that threaten the country’s economic and fiscal outlook. But Ghana’s record does not inspire confidence. In the last decade, the government has allocated $2 billion to the Ghana National Petroleum Corporation (GNPC). These investments have financed equity stakes in exploration, development and general operations in oil-producing fields. NRGI’s Risky Bet report shows that, globally, oil and gas projects currently in the pipeline and worth an estimated $400 billion, run the risk of not breaking even. Against the backdrop of the global energy transition, GNPC’s ambitions of becoming an operator are risky.

In July 2021, Ghana’s Ministry of Energy and GNPC declared their intention to sink an additional $1.65 billion of public money into shares of Aker Energy’s oil project — yet another “risky bet” given the increasing pace of the global energy transition, which would result in poor returns on such a large-scale investment. Furthermore, such a decision would divert precious capital that the government could invest in more socially beneficial programmes, such as education or cheaper and more diverse energy sources, that could power development in Ghana. Thankfully, after severe criticism from civil society organisations, the public and industry oversight bodies in Ghana, the government paused its investment plans in the Aker shares.

No doubt, Ghana’s economic and fiscal outlook is uncertain. The 2018/19 oil licensing round remains unconcluded and oil production is projected to decline. International companies are redirecting their investments, and projects have been delayed. State oil revenues peaked in 2018, at 10 per cent of total government revenue, and dropped to seven per cent in 2020, due to the coronavirus pandemic. The ongoing war between Russia and Ukraine and the related global energy crisis now present huge uncertainties for the oil sector, including the prospect of a global recession.

The good news is that Ghana now has a golden opportunity to develop a comprehensive and context-specific plan for navigating the global energy transition. In response to COP26 and Ghanaian CSOs’ demands for a national energy transition policy, the government launched the National Energy Transition Committee (NETC) in December 2021. The committee is tasked with developing a national policy document on steps the country can take to successfully navigate the global energy transition. The NETC is also tasked with conducting a nationwide consultation on Ghana’s energy transition. At the first regional forum organised by the Ministry of Energy on behalf of the NETC, Vice President Dr Mahamudu Bawumia said the NETC’s nationwide consultations are key to success: “We need to develop plans and implement options that people can relate to.” He also stressed the importance of equal opportunities for all citizens to enjoy the benefits of the energy transition and ensure social justice in the process.

The transition plans must address Ghana’s growing energy needs. Decisions about energy sources and related services should be based on analysing different solutions over the long term, mindful of the likelihood that many factors (such as the competitiveness of renewables and gas) may change quickly over the coming decade. Accordingly, the NETC should review the role of fossil gas over the course of the transition…

Essential elements for Ghana’s approach

The establishment of the NETC is an important and valuable first step. The following recommendations, if adopted, would put the committee on track to deliver a successful energy transition plan:

Include all voices. Ghana’s plan should be inclusive and leave no citizen behind. The plan should address how government will support local economies with relevant training, technology and finances to take advantage of the new opportunities in the transition;
Enlist experts. The NETC should engage sector experts working on the energy transition to help ensure that the plan is informed by data and technical analysis;
Promote open dialogue. Open and honest engagement between all relevant stakeholders will help build consensus and ownership around a transition pathway that is widely considered by citizens as viable and necessary. A shared understanding of the risks and opportunities of the energy transition is critical to agree on a shared strategy;
Plan in harmony and coordination with existing policies. The energy transition plan should harmonise existing policy objectives and remedy the systemic inefficiencies in existing policy implementation;
Improve governance of climate finance. The Ministry of Finance should spell out the role of international climate finance in energy transition planning and interrelate the energy transition plan with Ghana’s (conditional) nationally determined contributions under the Paris Agreement. Across the board, this requires building the state’s capacity to receive and deploy international climate finance;
Take a critical and dynamic approach to energy options. The transition plans must address Ghana’s growing energy needs. Decisions about energy sources and related services should be based on analysing different solutions over the long term, mindful of the likelihood that many factors (such as the competitiveness of renewables and gas) may change quickly over the coming decade. Accordingly, the NETC should review the role of fossil gas over the course of the transition — not assume from the outset that gas will be a constant;
Assess implications for existing institutions. Ghana’s energy transition plan should consider the role of existing institutions such as GNPC in light of the long-term, macro pathway, rather than starting with assumptions about their purpose and role. Making the right investment decisions will require transparency and robust risk assessment.

Nafi Chinery is the West Africa (Anglophone) regional manager at the Natural Resource Governance Institute (NRGI).

Strictly Personal

As African leaders give excuses, peers reach for the skies, By Tee Ngugi

Published

2 hours ago

September 23, 2023

Ifeoluwa Dada

Many Africans might have missed an event that should have been at the centre of the news. On August 23, 2023, India landed a spacecraft on the moon, making history as the fourth country to do so.

India is in exalted company. The other countries in that rarefied club are Russia, the US and China. India did not just land a spacecraft on the moon, it landed the craft near the south pole of the moon — the only country to achieve such a feat.

The reporting on this in the African press missed the significance of India’s achievement. Most media reported it as if it was another routine space mission by another power. First, any landing on the moon or any missions into space by any country are not routine.

They demonstrate the most advanced science and technology and their economic might. They showcase meticulous organisation, steely political will to achieve national ambitions, and an extraordinary sense of patriotism among citizens to make their country great.

Read: India becomes first nation to land spacecraft near Moon’s south pole

There is another reason why this news should have dominated our airwaves and discourse. India was colonised for more years than most African countries. India, like African countries, is multiethnic and multireligious. India, like Africa, has suffered from social strife. India, like many African countries, has gone to war with neighbouring countries. India, just like us, has to deal with disabling outdated traditional customs and beliefs.

And yet it did not use any of these characteristics as an excuse not to reach, quite literally, for the skies.

Further, India suffers from Monsoons and volcanic activity from which, for the most part, we are spared. It has a huge population, which many African countries do not. Yet it did not use these as excuses not to compete with, and sometimes beat, the best.

Perhaps we let this event pass without much commentary because we felt ashamed. Ghana became independent in 1957, 10 years after India.

Decades later, India had expanded its railway network to become the largest in the world. Ghana just expanded the railway left by the British the other day. As Ghana’s economy collapsed, India’s rose steadily. As Ghana’s education system stagnated, India advanced in science and technology, enabling it to explode a nuclear device in 1974, 27 years after Independence.

As Ghana’s heath system collapsed, India advanced theirs. Today, India has very advanced medical science and health system. Our leaders, after collapsing our health systems, seek treatment in India. India has expanded its GDP to become the fifth largest in the world. Ghana’s GDP is $80 billion, below that of Luxembourg, a tiny country of less than a million people.

Ghana is, of course, representative of the African post-independence experience of mismanagement, thievery and collapse. Will India’s example wean us from our “Pathological Excuse Syndrome” (PES)? Unlikely.

The Kenya Kwanza regime has churned out more excuses in one year than all previous regimes combined.

Tee Ngugi is a Nairobi-based political commentator.

Strictly Personal

What a beautiful summit! Now to vague promises by rich North, Joachim Buwembo

Published

2 days ago

September 21, 2023

Ifeoluwa Dada

In an average lifetime, an African is expected to get involved in and attend many weddings (and funerals). First, you attend those of your elders, which leaves you hoping that yours too will not only come one day but that it will also be more glamorous.

Then there were those weddings (and funerals) of your contemporaries for which you have to pay the ‘African tax’, partly out of fear and hope that when your turn comes, people will contribute generously since you will have been known to be a generous contributor yourself.

Finally, you have to attend weddings of the younger generations, including virtual ones like the ones that were held during the Covid-19 lockdown, or those being staged in different countries where the wedding couples live.

In my idealistic opinion, one shortcoming of many wedding formats and texts is the vague and often immeasurable nature of the promises made.

Fine, the specifics and details could darken the joyful, colourful ceremony and even bog it down, but in a separate, written and signed agreement, things should be spelt out. This would probably even make divorce proceedings less messy.

How for instance is love measured? What does providing for and protecting include? And comfort? At least “until death do us part” is fair for it specifies an event and so no one can compel a surviving spouse to be buried with a dead partner (and you know how many relatives would love to do that and then take over the house and other valuables). But one can argue their way out of the other wedding promises.

The climax of wedding injustices comes from the preachers who urge the partners to always forgive the other party for whatever crimes they commit. If courts operated in the same spirit, all murderers and robbers would walk free to continue murdering and robbing more victims while counting on systemic forgiveness.

The text of the declaration at the end of the big Nairobi climate summit for Africa brought to mind a glittering wedding, whose success is measured first on its having been held at all, the number of guests, the size of the cake and the courses of the meal. Africans should hope that future climate summits are not measured the way a bride measures a wedding (including how less beautiful her lady friends looked), but in tangible, countable outcomes.

At the Nairobi climate summit, we Africans demanded specifics from the rich countries with which we are justifiably angry. We were accurate on what they owe and should pay in Nationally Determined Contributions (NDCs). Then we also made our ‘commitments’ but were careful enough to remain non-committal. We promised policy formulations, the right investments and job creation.

Somehow, we did not say how many jobs and by when. This was a climate summit, for God’s sake, and the heads of state who have armies of researchers at their disposal should have specified, or at least estimated, the number of jobs to be created in the provision and application of clean energy.

Was there any commitment to investing in the conversion of the continent’s ‘abundant rare’ earth minerals into mobility batteries that reduce pollution rather than “exporting jobs” to already rich countries for a pittance? Was there a commitment to how many megawatts of hydroelectric power will be committed to the electrification of railways by which year?

We remained silent on acres or square kilometres in reforestation. We mentioned the carbon sinks of the Congo and the savannah but did not specify how we shall protect them. In short, we did not put any figures or timelines on our ‘commitments’.

The Africa Climate Summit was thus like a wedding which the bride sees as an achievement in itself, that she has been taken down the aisle (even if the guy turns out to be a wife beater and drunkard).

For Kenya, again staging the inaugural summit in itself was a success, for beating the other potential brides on the continent – Morocco, South Africa, Egypt and lately Rwanda – from a tourism promotion point of view.

All the same, we rejoice for the very good effort by Kenya and do hope that subsequent such summits will have explicit deliverables and timelines on which the Africans can hold their leaders to account.