$250bn energy transition financing target overly ambitious – Dr Alex Ampaabeng

$250bn energy transition financing target overly ambitious – Dr Alex Ampaabeng

Fiscal policy specialist with Oxfam, Dr Alex Ampaabeng, has described as “very ambitious” government’s goal to raise some $250bn to finance its energy transition plan.

His assertion was premised on the fact that, the targeted amount is three to four times the value of the Ghanaian economy which is pegged roughly at $70bn.

“I think that’s a bit difficult question to comment on and the reason is that, the NETC said a lot of modelling was done to come out with the $250 billion figure.

“But having said that, I do think that looks very ambitious, because you’re trying to raise money that is more than three times or four times the size of our economy, to invest in a sector of the economy. So there are some issues with the figure mentioned, but again, it’s a process that is going to go on for the next 50 years,” he told norvanreports in an interview on the sidelines of a policy dialogue themed, Energy Transition in Ghana: Our state of play and agenda for COP 27.

The policy dialogue was jointly organized by Action for Citizens-led Transformation Africa (ACT Africa) and the Natural Resource Governance Institute (NRGI).

The policy dialogue was held in preparation of the COP 27 to take stock of government’s plan and seek to understand and influence government’s position for the upcoming climate conference, exploring issues on energy transition, financing and its implications for the country and the African Continent at large.

According to the National Energy Transition Committee (NETC), government is looking to raise a total amount of $250bn to fund its energy transition plan from fossil fuels to renewable energy.

The projected $250bn funds, is to be raised over the next 50 years.

Callistus Nero, a member of the NETC, speaking at the policy dialogue, noted the anticipated funds is to help Ghana transition into a net zero carbon economy by 2070.

“To entirely achieve our energy transition targets by 2070, the country will need a total of $250bn in financing from investors,” he said.

Adding that, the NETC and the government at large, is yet to identify investors that will finance its energy transition plan.

“At the moment, we are planning to go on a roadshow to showcase to investors both locally and internationally, the opportunities that exist in our energy transition plans to attract them to help achieve our transition targets,” he added.

The National Energy Transition Committee (NETC), is the statutory body tasked with the mandate of developing a national policy document and strategy on steps to successfully navigate the global energy transition.

Implications of energy transition 

Speaking further in the interview, Dr Ampaabeng quipped the country’s transition to cleaner energies, has numerous implications for the economy. 

He noted that, with the transition, government can lose the needed revenues from fossil fuel exploration and production. 

A significant loss of revenue through taxes on the fossil fuel industry, can result in the further decline of the country’s tax-to-GDP ratio which is already low for Ghana as a lower middle-income country. 

Additionally, the transition can contribute to unemployment if trained and skilled persons in the fossil fuel industry are not re-trained and transitioned into the country’s burgeoning renewable energy sector. 

“I think the first implication we are going to have as a result of the transition, is unemployment. Because, we already have people who are employed in fossil fuel industry, so transitioning into clean energy will result in job losses unless we re-train them. 

“Then again there is the potential loss in government revenue. The oil sector contributes a lot to our revenues, but as we shift away into more greener energy what is going to happen to the revenue that we’re currently generating from our oil fields,” he quizzed. 

At the moment, renewable energy forms 2.4% of the country’s energy mix. 

The proportion of renewable energy in the country’s energy mix is however, expected to increase and become a major part of the country’s energy mix as Ghana looks to transition to a low carbon economy and ultimately a net zero carbon economy in the next 50 years.