Ghana net-zero plan offers US$500bn worth of investment opportunities

Ghana has unveiled an ambitious energy transition plan that holds the promise of galvanizing US$500bn worth of private sector investments in electric vehicle charging infrastructure, solar-powered mini-grid solutions, and green cookstoves among other sectors. The Ghana Energy Transition and Investment Plan is aimed helping the West African republic achieve its net-zero target by 2060. It has identified a number of sectors where investors could find new opportunities.

Oil and gas: Flaring – the act of burning off surplus natural gas during petroleum extraction - comprises 97% of emissions from Ghana's oil and gas sector and about 25% of the nation's overall CO₂ emissions. The roadmap foresees reducing the impact of flaring through adopting cost-effective methods such as using vapour recovery units and leak detection. As for the downstream oil refining, the aspiration is to diminish emissions by utilising carbon capture and storage (CCS) technology.

Industry: Starting in 2040, the energy transition strategy proposes decarbonising Ghanian steelmaking industry by using hydrogen to extract iron from ore, resulting in water vapour emissions instead of carbon dioxide. Additionally, it contemplates reducing emissions in cement production by transitioning to natural gas as an energy source and capturing CO₂. To lower the emissions associated with chemicals manufacturing, the introduction of industrial heat pumps and gas CCS technology will play pivotal roles.

Transport: In the transport sector, the aim is to first have improved efficiency standards for all vehicles on the roads and greater public transport usage. The plan then is to gradually shift all cars and motorcycles to electric vehicles, while trucks and buses will transition to electric and hydrogen. From 2055 onwards, it is envisioned that the aviation and shipping segment will start using biofuels. In addition to supplying these green vehicles in the market, there will also be investment opportunities for the private sector to provide the electric charging infrastructure through public-private partnerships. 

Cooking equipment: Ghana has one of the highest rates of deforestation in Africa. A significant factor in this is the use of wood and charcoal for cooking, the burning of which also produces a significant amount of greenhouse gases. Charcoal is the predominant cooking fuel in Ghana, accounting for more than three-quarters of domestic energy consumption. The plan's immediate goal is to substitute traditional biomass cookstoves with more efficient models and those fuelled by oil. From 2030, there's an emphasis on rolling out a greater volume of electric and enhanced biomass cookstoves, with the aim to phase out oil-derived versions by 2050. Singaporean fund manager, Impact Capital Asset Management (ICAM), is already making strides in this sector. Last year, in partnership with Indian carbon credit developer EKI Energy Services, it launched a fund to invest in the manufacturing and distribution of energy-efficient cookstoves in Kenya. This venture aims to provide returns to investors by selling carbon credits to companies looking to offset their emissions.

Power: In the electricity generation sector, Ghana’s energy transition roadmap aspires for solar energy deployment to reach 26 GW by 2040, followed by an annual average addition of 5GW, targeting a 146 GW capacity by 2060. Post-2045, nuclear unit deployments are also anticipated, with a projection of 3 GW by 2060.

Hydrogen: Starting in 2045, the plan recommends producing environmentally friendly hydrogen. By 2060, green hydrogen (made using renewable energy) and blue hydrogen (made from natural gas but with captured emissions) are expected to constitute 85% and 15% of the 90 PJ hydrogen production, respectively.

The energy transition strategy anticipates pooling financial resources from a combination of private sector players and providers of de-risking instruments, such development finance institutions, private foundations, and green finance funds.

To catalyse the shift towards sustainable technologies, the government plans to roll out a suite of regulations, standards, price incentives, subsidies, and enabling programmes. The implementation of the plan will be coordinated through a newly established Energy Transition Office.

 

References

‘Singapore firm launches fund for energy-efficient cookstoves in Africa’, NTU-SBF Centre for African Studies, 23 March 2023

‘Ghana Energy Transition and Investment Plan’, Sustainable Energy for All, September 2023

‘Sustainably reducing emissions and reaching the poor: Gyapa improved cook stoves – Ghana’, United Nations Climate Change, Accessed 18 October 2023