Mitigating The Shortfalls Of Energy Transition: Leveraging On Green Mineral Resources For National Gains
Energy is a crucial input for the development of any nation. Non-renewable energy sources such as coal, oil, and natural gas, with its greenhouse gas emission tendencies contribute about 80% of the world’s energy mix. Petroleum use accounts for about a third of the total global carbon emissions 1 .Governments around the world are now engaged in efforts to ramp down greenhouse gas emissions from fossil fuels to prevent the worst effects of climate change even as energy is used to spearhead development. The Conference of Parties (COP) of the United Nations Framework Convention on Climate Change met in November 2021 in Glasgow for its 26 th annual summit to accelerate progress on reducing carbon emissions and
keeping the global temperature rise below 1.5 . Renewable energy technologies were the central theme as the conference ended with several initiatives and agreements aimed at accelerating the inclusion of renewable energy technologies into the world’s energy mix.
Ghana relies heavily on fossil fuels for its electricity generation and domestic energy
consumption. However, increasing global concerns over climate change has led to technological advances and global policy changes that have now changed the demand landscape for oil and gas. Research suggests that, globally, a third of oil reserves, half of gas reserves and over 80 percent of current coal reserves should remain unused from 2010 to 2050 in order to meet the target of 2 °C 2 . Just some few years ago, the country seemed set to become the next major producer of oil and gas and international companies were scrambling to win exploration rights in hope of making commercial discoveries. Basins with hydrocarbon deposits in Ghana have
only just started to attract development and major oil companies following political pressures are already pulling out and pivoting into the renewable energy markets. Natural gas was identified as a long-term transitional energy source, creating hope for new opportunities for the country. These developments, many thought, would bring significant revenues for governments and a new hope to millions of people and a transformative effect on the country’s economy in the long term.
The UK and other G7 nations have announced on separate occasions that there will be no international government support for new fossil fuel projects going forward and the International Energy Agency has recommended that there should be no new O&G fields approved for future development. Development banks such as the World bank and African Development Bank who have traditionally enabled large-scale investments in the sector are also staggering in providing investment or financial guarantee for exploitation of these hydrocarbon resources. Without the support of these funding partners, it would be almost impossible to attract private investment in the sector due to the high upfront costs of exploration, and investment returns requiring many years. The country also has a high cost of
borrowing due to the high-interest rates. Hence the only source of capital for a large project isthrough government support or funding. This starves emerging businesses of capital and discourages diversification considering government’s budget constraints.