Vulnerability of the economy of Ghana to the renewable energy transition dynamics

Abstract

Renewable energy transition is a major mitigation strategy for climate change. Yet, its implications on emerging petroleum economies such as Ghana are sparse. This study analyses the vulnerability of the economy of Ghana to the renewable energy transition dynamics. The study uses data from the WB, BoG, US EIA and Census Bureau, Federal Reserve Economic Data, PURC, and PIAC. The study employs the dynamic ARDL simulation and state-space models. From the simulated scenarios, the study concludes that energy transition at five percent and business as usual increase access to electricity up to the sixth year after which access to electricity decreases. Also, renewable energy transition scenarios increase energy availability after the second year until after the eighth year, when it increases energy availability at a decreasing rate. Again, the study concludes that the IEA’s investment scenarios have negative consequences on Ghana’s oil exports between 2020 and 2040. Further, the study concludes that business-as-usual energy transition scenario increases employment by more than five percent transition scenario in the industrial sector, five percent scenario hampers employment in the agriculture sector, while both scenarios of renewable energy transition increase employment in the services sector up to the next six years. However, each scenario reduces vulnerable employment. Based on the findings of the study, the study recommends that Ghana should continue with the energy mix strategies and systematically integrate renewables into the overall energy mix. Again, petroleum authorities should look out for more countries that would import crude oil from Ghana. Also, Ghana must craft a crucial policy framework that supports energy transition and must address the upstream barriers and challenges of renewables by making it easy for the private sector to invest in renewables. Ghana must organise retraining and education programmes for Ghanaians to take up the opportunities in the renewable energy sector to mitigate employment vulnerabilities. Moreover, Ghana should operate its refinery to be able to absorb much of the crude oil produced in the country rather than relying on foreign consumption.