Energy poverty and climate change mitigation in Ghana: An economic assessment

Abstract

Ghana’s economy, though energy-poor, consistently grew over the past two decades, reaching 14.4% in 2011. This growth far exceeded the global average during 2011 of about 4%, from about 5.1% in 2010, making Ghana one of the fastest-growing economies in the world at that time. The Ghana Shared Growth and Development Agenda (2010–2013) projects further growth to a per capita income of USD 3000 by 2020, which is more than double the current per capita income. Since traditional biomass accounts for over 60% of total energy consumption in Ghana, attaining this target through a business-as-usual household energy approach assumes insensitivity of economic growth to energy poverty, a deceptively harmless development issue. Diversification of energy supply and demand should, however, be inevitable in the wake of climate change shocks and low-carbon development requirements. This paper assesses climate change-induced energy behaviour of households in Ghana, who contribute 32% of total energy sector emissions of greenhouse gases. It also assesses climate change-induced welfare change for households in a low carbon-development scenario as against business as usual. The net welfare effect for the scenario to switch from fuelwood to mitigate climate change was negative. The results indicate that Ghana is in an energy poverty trap, providing mixed effects for climate change mitigation. To effectively mitigate climate change under energy poverty, Ghana should promote the cultivation of energy forest plantations, introduce and use improved charcoal stoves and improved charcoal production kilns. These could lead to greater efficiency in the energy sector and create jobs for rural communities involved in the plantations for sustained growth, while at the same time delivering benefits from mitigation funding.

Keywords: Climate change mitigation, economic welfare, energy poverty, fuelwood, Ghana