COP28 – What Ghana and African businesses have been doing and how they can impact the discussions
Ghana has been a leading voice on the international stage on climate change and a keen participant in the UN Climate Conferences and dialogue on climate related matters. At COP27 last year, for example, the President, Nana Akuffo Addo, delivered a keynote speech in his role as chair of the Climate Vulnerable Forum, pushing for the fulfillment of the commitment to doubling adaptation finance that was made at COP26 in Glasgow, calling for a standalone implementation plan to enhance transparency and confidence that the doubling in adaptation finance will be realized by 2025, and launching the Global Shield Against Climate Risk Fund.
In accordance with the Paris Agreement, Ghana submitted its original Nationally Determined Contribution (“NDC”) target in September 2015, committing to lowering its greenhouse gas emissions by at least 15% by 2030.
Shortly before COP26, Ghana reaffirmed this commitment and outlined a comprehensive set of mitigation and adaptation actions across various economic sectors including scaling-up of renewable energy penetration by 10% by 2030, a target that is incorporated into Ghana’s Strategic National Energy Plan (SNEP).
Aligning National Strategies with Global Commitments: Ghana's Pursuit of Climate Goals and Inherent Challenges Amidst the Paris Agreement
The energy transition and the switch to renewable energy
Like countries across the continent - and globally - Ghana is pushing hard to grow renewable energy. In some ways, Ghana is ahead of the curve. Thanks to the Volta dam, a significant proportion of our electricity comes from hydroelectric power – just over 35% in 2022.
There is still work to be done however as most of the remaining electricity is generated by thermal power. Other renewable energy sources, solar and wind, represent less than 1% of total power generation in Ghana at the end of 2022.
To help increase the renewable energy share and hit our NDC targets, in November last year, the Government published Ghana’s National Energy Transition Framework, which it launched alongside COP27. This framework was developed by the National Energy Transition Committee, following a year-long consultation program and is the first policy framework formulated with a specific net-zero target in mind. It presents a set of long-term policy recommendations to help Ghana achieve its NDC commitment by decarbonising the energy sector and reaching net-zero emissions by 2070.
The publication of the framework is a welcome development but, as the framework itself acknowledges, there are significant challenges to achieve the bold 2070 targets. Most importantly, financing, with an estimated USD 562 billion will be required to implement the Framework through to 2070. A challenge which is common across the continent.
Where Ghana’s approach differs from some other African countries is that as an oil and gas producing country, there is a particular focus on a just energy transition. The National Energy Transition Framework grapples with the challenge of meeting the 2070 net zero target while also ensuring socioeconomic growth and the use of Ghana’s natural resources to help Ghana achieve its development goals. In his foreword to the policy, the President noted that Ghana’s energy transition must be achieved in a “just and equitable manner” and that “… Ghana is not oblivious to the need to balance her commitment to net zero, and the urgent need to transform her economy through the exploitation of the natural resources with which she has been endowed.”
Since the publication of the National Energy Transition Framework, the Government has taken a number of other measures to help grow renewable energy, including removing the lifting of a moratorium on the issuance of new wholesale electricity supply licenses in the renewable energy sector that had been put in place back in 2020 in response to oversupply; and launching the Scaling-up Renewable Energy Project.
For more information on the National Energy Transition Framework, please see our article here.
Carbon credits, climate finance and reforestation
Ghana has also been an early mover in climate finance and carbon credit trading activities, under the “voluntary cooperation” regime under Article 6.2 of the Paris Agreement. The Article 6.2 structure allows countries to transfer greenhouse gas mitigation outcomes to other countries, or to parties based in other countries, in exchange for funding. The Article 6.2 framework is a decentralized approach, which requires parties to enter into separate bilateral or multilateral arrangements known as “cooperation agreements”.
Ghana signed one of the first Bilateral Cooperation Agreements in November 2020 with Switzerland and at a side event at COP27 last year, the Government of Ghana, acting through the Minister for Environment, Science, Technology & Innovation, announced the authorization of the transfer of mitigation outcomes under its new climate-smart rice project.
Ghana has also established the “Ghana Carbon Market Office” (CMO) as a secretariat in the EPA to support the implementation of the Ghana international carbon market activities and the CMO has been very active, including:
- establishing the Ghana Carbon Registry system, which is an online database for quantifying and verifying mitigation outcomes; and
- publishing the policy framework for international carbon market activities, which is expected to lead to updated regulation for the trading of carbon credits in Ghana.
In addition to the Switzerland Agreement, with the support of the CMO, Ghana has reportedly concluded negotiations on bilateral cooperative agreements with Sweden, Singapore, and South Korea. Alongside the bilateral Article 6.2 arrangements, Ghana has also been active in several other climate finance and carbon trading initiatives. For example:
- the Ghana Cocoa Forest REDD+ Program, under which the government has earned some US$4.8 million from the World Bank’s Forest Carbon Partnership Facility by reducing nearly one million tons of carbon emissions through forest conservation and degradation prevention – only the second country in Africa to receive payment; and
- the Ghana Shea Landscape Emission Reduction Project (GSLERP), another REDD+ program established in partnership with the Green Climate Fund. The objective of the project is to increase carbon stocks by restoring 100,000ha of degraded shea parklands and restoring 200,000ha of savanna forest and woodlands among others.
Green “transition” minerals
Ghana is looking to capitalize on the opportunities presented by the growing need for green or “transition” minerals, particularly lithium and graphite. The challenge here is to avoid another “resource curse” and ensure that the value of these critical minerals accrues to Ghana.
In August this year, Cabinet approved a new policy for the exploitation, management and regulation of lithium and other green minerals in Ghana. This policy is intended to facilitate the exploitation of green minerals in a way that benefits Ghanaians and protects environmental sustainability.
Amongst other things, this policy proposes a higher level of local participation in the green minerals value chain, beyond the 10 percent state interest held in conventional mining entities. The Policy also proposes putting in place incentives and measures to attract the needed investments, adding that stabilization clauses, development agreements and other measures would be put in place to give investors the comfort to put their resources in the sector.
In October this year, the Government granted its first concession for the mining of lithium, to Atlantic Lithium, subject to parliamentary ratification. The project, which is projected to produce around 360,000 tons of lithium a year, grants the government favorable royalty rates and a 13 percent free carried interest. The mining lease also requires Atlantic to undertake further studies on the potential for downstream conversion of lithium in Ghana, including the local use of feldspar and kaolin for ceramics and other products. These studies have commenced, and the findings are expected to be submitted to Government by end of February 2024
Additionally, the Minerals Income Investment Fund, has acquired a 6 percent contributing interest in Atlantic Lithium’s Ghana Portfolio and Atlantic Lithium will be required to list on the Ghana Stock Exchange to further enhance and deepen local participation.
African Business Contributions in COP28's Climate Discourse
Perspectives on the impact of climate change
Most obviously, African countries can contribute the unique perspective as the continent most affected by climate change. Africa has the lowest per capita fossil fuel emissions of any region globally – responsible for only around 3% of global fossil fuel emissions prior to 2021 – but according to the Intergovernmental Panel on Climate Change, it faces the most severe challenges due to climate change. Seven out of the ten most vulnerable countries by climate change in 2021 were African.
This perspective was advanced and further fleshed-out in the Nairobi Declaration on Climate Change and Call to Action adopted at the Africa Climate Summit in September. Ghana, as the chair of the Vulnerable Twenty (V20) Group of Finance Ministers of the Climate Vulnerable Forum, has called on world leaders to develop a fit-for-climate financial scheme to address climate issues. Ghana is hosting the CVF secretariat, and the Government has announced that it is looking to use this opportunity to shape the climate discourse and secure resources for a just energy transition.
Hopefully, through the CVF, African countries can share our experience of how climate change affects them and what adaptation projects really work, on the ground.
Experience as problem-solvers in challenging markets
African businesses are problem-solvers, and they are used to finding innovative approaches to address the specific challenges in our markets. For example, look at how mobile money has developed to address the needs of unbanked and deliver financial inclusion outside of typical formal channels. Or the innovation seen in African technology companies providing fintech services or agtech solutions for smallholder famers provided by the likes of Complete Farmer and Farmerline.
We are seeing the same innovation and problem-solving approach to climate change issues and the energy transition. We have seen, for example, an increased focus on distributed generation and mini-grid projects over the past year. In May 2022, the Government signed a grant agreement with the African Development Bank, the Climate Investment Fund and the Swiss Government Federation to provide USD 69.88 million of funding to implement the Scaling-Up Renewable Energy Programme, which involves the development of 35 mini grids in the Volta Lake region and the deployment of 12,000 units of roof-mounted net-metered solar PV systems for public institutions, Small and Medium-sized Enterprises (SMEs) and selected households; and private sector off-grid solar providers are expanding rapidly.
Experience as carbon credit producers
It is also important that African countries can also share their perspective as the “host” countries in carbon credit trading and adaptation programs. Generally, African countries are the “producers” of carbon credits, and as such, have an important role in influencing the design of programs that work for the producers as well as the purchasers of carbon credits.
Africa has already had to grapple with some of the biggest challenges in this area including the measurement, verification and tracking of mitigation outcomes. This experience has allowed us to develop methodologies that can work in practice in Ghana and other African jurisdictions, whilst also satisfying the requirements of credit off-takers.
The Ghana/Switzerland Cooperation Agreement is even used as a case study in the training materials published by the UN on Article 6.2, and the points considered in our arrangement influenced the guidance on Article 6.2 of the Paris Agreement adopted at COP26 and COP27.
COP28's Role and Global Collaborations in Climate Advocacy
Funding
Perhaps most importantly, COP28 should provide a platform for African businesses to source the funding needed to address our climate change challenges.
In Ghana and Africa more generally, there is a huge need for finance to implement climate change mitigation and adaptation measures. For example, the National Energy Transition Framework I mentioned earlier estimates that around USD 562 billion of investment will be required to implement the energy transition and achieve Ghana’s 2070 targets.
Ghana has particular challenges, because not only is investment required to move to renewable energy, but significant investment in transmission and other related infrastructure is also required. The National Energy Transition Framework estimates about US$76 billion for transmission and distribution infrastructure costs and US$14.5 billion for additional gas infrastructure is required. This is for Ghana alone and thus far, Africa has received relatively little climate related investment. Of the $546 billion global climate finance provided in 2018 only $14 billion was spent in Africa - a drop in the ocean.
This stark picture sits behind the call made by African leaders in the Nairobi declaration for the international community to honour the commitment made to provide $100 billion in annual climate finance as long ago as 2009 at COP15 in Copenhagen, Denmark. In Ghana, the Ministry of Finance is in the process of establishing a Climate Financing Division to help improve coordination at the national level.
Advocating for appropriate regulatory and policy framework
African businesses have an important role to play in advocating for regulatory and policy changes that meet their needs and promote sustainable practices and encourage investment in climate solutions that work in Africa for Africa. With so many heads of state and government agencies in attendance, there is a risk that the voice of business might be lost and that, even if it is not, it is heard out of New York, London, or Paris.
By participating actively in the COP processes and particularly by working and collaborating together, African countries can help make sure their needs – and the perspective of African businesses - are taken into account.
Ghana will certainly continue doing its part. One final, good example of how Ghana is doing its part, is the Forest & Climate Leaders’ Partnership. This was launched at COP26 by the United Kingdom, as COP26 President, and Ghana by President Akufo-Addo, with 12 other Heads of States in attendance.
The partnership currently has 33 countries plus the European Union participating and is Co-chaired by the United States Special Presidential Envoy on Climate, SPEC John Kerry, and Ghana’s Minister for Lands and Natural Resources. It serves as a functional vehicle, designed to provide high-level political support to advance forests, nature and climate solutions.
At COP28, the FCLP will be organizing a technical knowledge sharing event on “Strengthening Inclusivity in REDD+ Programs”, featuring experiences from the Ghana Cocoa Forest REDD+ program I mentioned earlier, coordinated by the Forestry Commission and Ghana Cocoa Board. Only by sharing truly global perspectives can COP28 deliver truly global solutions that work for everyone, North and South.