The beginner’s guide to understanding energy transition

By Blessing Sarfo BOAKYE

Energy transition is a global movement reshaping how the world generates and consumes energy.

With most countries actively shifting from fossil fuels to cleaner, more sustainable alternatives, it has become essential to raise public awareness of this process, particularly in Ghana.

The Intergovernmental Panel on Climate Change (IPCC) defines “transition” as the process of moving from one state or condition to another over a specific period.

In the case of energy transition, this refers to the global shift toward renewable energy and low-carbon technologies aimed at reducing environmental impact and enhancing energy security.

This article examines the history of energy transition, its significance, how Ghana has implemented it, and its relevance.

The aim is to present these complex concepts in a clear and accessible manner, enabling individuals from various backgrounds to understand and engage with this important global issue.

The historical context of energy transition

The concept of energy transition is actually not new; humanity has undergone multiple shifts in energy sources throughout history. Below are the energy transitions that the world has gone through throughout history:

1. Pre-Industrial Era: This era was before the use of machines and tools for tasks. Early human societies primarily used biomass (wood, peat, and animal waste) as sources for heating and cooking.
2. First Energy Transition (18th-19th Century): The Industrial Revolution marked the shift from biomass to coal. Coal-powered steam engines revolutionized industries, transportation, and urbanization. This period saw the rapid expansion of coal mining and the establishment of railroads and factories that relied heavily on steam power.
3. Second Energy Transition (20th Century): The widespread adoption of oil and natural gas (also referred to as fossil fuels) began replacing coal as the dominant energy source. Oil became the backbone of modern transportation, powering automobiles, ships, and airplanes. The discovery of vast oil reserves in the Middle East, the United States, and Russia spurred global economic growth. Meanwhile, natural gas emerged as a cleaner alternative to coal for electricity generation and heating.
4. Third Energy Transition (Late 20th – 21st Century): The growing recognition of environmental issues, along with advancements in technology, accelerated the shift toward renewable energy sources like solar, wind, and hydro. The 1970s oil crisis highlighted the vulnerabilities of fossil fuel dependence, prompting investments in alternative energy research. In recent decades, improvements in battery storage, smart grids, and energy efficiency have supported the integration of renewables into mainstream energy markets.

Key factors driving the recent energy transition

The 1970s oil crisis: One of the most significant energy-related events of the 20th century was the oil crisis of the 1970s.

In 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC) imposed an oil embargo on nations that supported Israel during the Yom Kippur War, particularly the United States and Western Europe.

This led to a dramatic increase in oil prices, fuel shortages, and economic disruption. A second oil crisis occurred in 1979 due to the Iranian Revolution, further exacerbating energy instability.

These events exposed the vulnerabilities of excessive reliance on fossil fuels and prompted industrialized nations to explore alternative energy sources, invest in energy efficiency, and implement policies to reduce oil dependency.

Environmental challenges: One of the most pressing reasons for the energy transition is the need to address climate change. The energy sector accounts for nearly 73% of greenhouse gas emissions globally.

The burning of fossil fuels releases significant amounts of greenhouse gases such as carbon dioxide and methane, which contribute to global warming and extreme weather conditions.

Governments, businesses, and international organizations have recognized the urgency of reducing carbon emissions, leading to policies promoting renewable energy, energy efficiency, and carbon neutrality.

Depleting fossil fuel reserves: Fossil fuels are non-renewable resources. As reserves are depleted, extraction becomes more challenging and costly, pushing the need for alternative and more sustainable energy sources.

This depletion has necessitated investments in renewable energy such as solar, wind, hydro, and geothermal energy to ensure long-term energy security.

Technological advancements and cost reductions: Advances in technology have made renewable energy more efficient and affordable.

The cost of renewable energy technologies, particularly solar and wind power, has decreased dramatically over the past decade.

This makes them more competitive with fossil fuels, facilitating their widespread adoption.

Government policies and international agreements: Global agreements such as the Paris Agreement have set ambitious targets for reducing carbon emissions and limiting global temperature rise.

Governments worldwide are implementing policies, incentives, and regulations to accelerate the transition to renewable energy.

These include carbon pricing, subsidies for green energy projects, and phasing out coal-fired power plants.

Corporate and consumer demand for sustainability: Businesses and consumers are increasingly prioritizing sustainability.

Many corporations have set net-zero targets, committed to using 100% renewable energy, and are integrating Environmental, Social, and Governance (ESG) principles into their operations.

Additionally, consumers are demanding cleaner energy options and sustainable products, further driving the transition.

Public health benefits: The transition to renewable energy also addresses public health concerns. Air pollution from fossil fuel combustion is linked to respiratory diseases, cardiovascular conditions, and premature deaths. Cleaner energy sources reduce air pollution, improving overall public health and reducing healthcare costs.

Ghana and energy transition

Ghana has taken several steps to align with the global energy transition towards cleaner and more sustainable energy sources. Here are some key initiatives and policies:

• In 2011, the Renewable Energy Act, 2011 (Act 832) was enacted with an object of providing for the development, management and utilization of renewable sources for the production of heat and power in an efficient and environmentally sustainable manner. This Act was enacted as a result of Ghana’s commitment in 2010 to increase renewable energy in its energy mix by 10% in 2020. This target was however pushed to 2030 under the Strategic Energy Plan (2019).
• In 2022, Ghana launched its Energy Transition Framework (ETF) 2022-2070, aiming for net-zero emissions by 2070 while ensuring energy security and affordability. Net-zero emissions simply means that, there must be a balance between the amount of greenhouse gases that are produced and the amount that is removed from the atmosphere. In other words, any emissions produced are offset by measures that remove or reduce an equivalent amount of emissions. This will in turn reduce and potentially eliminate global warming that is caused by these greenhouse gases.
• Again, in 2024, the President of Ghana unveiled the Ghana Energy Transition and Investment Plan that was built on Ghana’s Energy Transition Framework. This plan maps out Ghana’s journey to achieve net-zero emissions by 2060 instead of the 2070 in the ETF. The President, in his speech, stated that “this plan is a testament to our dedication to fostering green industries, nurturing the evolution of cutting-edge low-carbon technologies and propelling our nation towards a sustainable industrial revolution while giving equal growth opportunities to men and women.”
• Also, the Bui Power Authority has constructed a floating solar system on the Bui reservoir, as part of its vision to pursue the development and expansion of solar PV resources. The goal is to construct a hydro-solar PV hybrid system as part of the Government’s effort to increase the contribution of renewable energy in the energy mix by 10% by 2030. The floating solar system, which is the first of its kind in the West Africa sub-region has been successfully integrated into Ghana’s National Interconnected Transmission System, facilitating the distribution of clean energy across the nation.
• Ghana has also introduced the National Electric Vehicle Policy to create an enabling environment to drive electric vehicle uptake in Ghana. This policy is to help to carbonize the transport sector.

Why energy transition matters?

Environmental impact: As already stated above, the burning of fossil fuels releases carbon dioxide (CO?) and other greenhouse gases into the atmosphere, leading to global warming and extreme weather events.

However, renewable energy sources like solar, wind, and hydropower produce little to no emissions compared to fossil fuels. Again, fossil fuel extraction and burning contribute to smog, acid rain, and water contamination.

Shifting to cleaner energy improves air and water quality. Unlike coal and oil extraction, which often lead to deforestation and ecosystem destruction, renewable energy sources have a smaller environmental footprint.

All these environmental impacts are reasons why this recent energy transition is needed, now more than ever.

Energy security: Energy security refers to the availability of reliable and affordable energy supplies. Many countries depend on imported fossil fuels, making them vulnerable to price fluctuations, geopolitical tensions, and supply disruptions just as what happened in the 1970 crisis.

A mix of renewables (solar, wind, hydro, geothermal) ensures a more resilient energy system. Again, investing in renewable energy reduces exposure to the risk unstable prices and economic crises that was associated with fossil fuel production.

Lastly, many renewable sources can be harnessed locally, reducing reliance on international suppliers and lowering transportation costs.

Economic growth and job creation: The transition to clean energy is a significant driver of economic development. As renewable energy adoption increases, new industries, business opportunities, and jobs are created.

The renewable energy sector employs millions worldwide, from solar panel manufacturing to wind turbine maintenance and energy storage solutions. As technology advances and economies of scale improve, the cost of generating renewable energy continues to decline.

In many regions, solar and wind power are now cheaper than coal and gas. Governments and private companies are investing in research and development of cleaner energy technologies, leading to economic growth and technological breakthroughs.

The President of Ghana, in 2024, when unveiling the Ghana Energy Transition and Investment Plan stated that “Our vision projects that by pursuing this transformative path, we will unlock approximately USD 550 billion in investment opportunities by 2060”. This is a testament to the untapped riches that energy transition will bring to Ghana.

Public health benefits: The burning of fossil fuels releases pollutants that contribute to respiratory diseases, cardiovascular conditions, and premature deaths.

Energy transition directly improves public health since cleaner energy will reduce these emissions, leading to fewer cases of asthma, lung disease, and heart diseases.

Fossil fuel extraction and processing often contaminate water sources, however, renewable energy production, especially wind and solar, has minimal water usage and pollution. With fewer pollution-related diseases, healthcare systems will experience less strain, saving billions in medical expenses and lost productivity.

Challenges & future outlook of energy transition in Ghana

Limited renewable energy infrastructure: Ghana’s energy infrastructure is still heavily reliant on fossil fuels and hydroelectric power, with limited large-scale solar and wind installations. Hydropower accounts for a significant portion of Ghana’s energy supply, but climate change-induced droughts reduce water levels, affecting power generation.

Also, Ghana’s national grid is not fully optimized to integrate intermittent renewable energy sources like solar and wind. Again, establishing large-scale renewable projects requires significant capital, which is a barrier to rapid deployment.

In solving these challenges, the Government must focus on investment in grid modernization and battery storage solutions to enhance reliability. Expansion of distributed solar energy systems, particularly in rural areas is also vital.

Financial constraints: Energy projects, especially renewable energy, require significant upfront investment. Ghana faces financial challenges that limit the country’s ability to fund large renewable energy projects and upgrade existing infrastructure.

Limited access to international climate finance is also a hurdle. Encouraging collaboration between the government and private sector can attract investment, reduce financial burdens, and accelerate the development of renewable energy infrastructure.

Weak enforcement of policies: Despite frameworks like the Renewable Energy Act, 2011 (Act 832), implementation still delays. Enforcement and implementation remain inconsistent. Gaps in regulatory frameworks, delays in energy sector reforms, and bureaucratic bottlenecks slow down the transition process.

In resolving these issues, the government should enhance the enforcement of existing energy policies and ensure that regulatory frameworks are transparent, investor-friendly, and aligned with international best practices. Periodic policy reviews and stakeholder engagement are essential.

Conclusion

Energy transition is not just a global imperative; it is a pathway toward a more sustainable, resilient, and prosperous future for Ghana.

With the increasing risks posed by climate change, energy insecurity, and economic disruptions linked to fossil fuel dependency, Ghana must continue to strengthen its renewable energy efforts.

Addressing issues like limited renewable energy infrastructure, financial constraints, and weak enforcement of existing policies is crucial for accelerating the transition.

By modernizing energy systems, attracting investment, fostering innovation, and ensuring effective implementation of policies like the Renewable Energy Act, Ghana can unlock the full benefits of clean energy, from job creation and economic growth to improved public health and environmental protection.

Ultimately, energy transition matters because it holds the key to reducing carbon emissions, achieving energy security, and safeguarding the well-being of current and future generations. With collective efforts from the government, private sector, and citizens, Ghana can achieve its goal of a cleaner, greener, and more sustainable energy future.

>>>the writer is a Trainee Associate at Sustineri Attorneys PRUC (www.sustineriattorneys.com). Blessing specializes in Corporate and Commercial Practice, Energy Law, Environment, Social and Governance (ESG), Dispute Resolution, and Intellectual Property. She welcomes views on this article via [email protected]

The post The beginner’s guide to understanding energy transition appeared first on The Business & Financial Times.

Read Full Story