Carbon tax could hasten industry’s transition to renewables – Expert

Businesses that fail to transition from conventional energy to renewables could soon pay dearly in carbon emission tax, an energy and sustainability expert has projected.

Globally, concerted efforts are being made to reduce carbon emissions and its effects on the environment and human lives – and this could soon lead to countries, including Ghana, introducing carbon tax as a way of discouraging businesses from using non-clean energy sources, according to John Williams, a consultant at Association of Ghana Industries (AGI) – Energy Service Centre (ESC) and a renewable energy expert.

“In the next five years it will be cheaper to operate a business on renewable energy than conventional energy; and in the next 15 years it will be more expensive to run on conventional energy sources because there will come into existence what we call carbon tax – paying for the carbon originating from the energy you use.

“Therefore, this is the time for companies to transition; because in the next few years you may be paying heavy tax,” he said.

To him, the shift toward renewable sources of energy is also a matter of life and death since greenhouse gas emissions are a known contributor to climate change, a major threat to human health: “As human species we need oxygen to survive, but the way we have developed means all the machines that we use give out carbon dioxide; so, it is good for industries to transition from conventional energy sources to renewables”.

He spoke to the B&FT on the side-lines of a breakfast meeting on renewable energy/energy efficiency technical support to commercial and industrial companies, organised by the AGI Energy Service Centre in Accra.

Mr. Williams maintained that if all the big industries in Ghana were to switch to renewables, carbon emissions would be reduced by over 42 percent.

The economic case for renewables

In terms of cost savings, a study conducted by Lazard revealed that unsubsidised utility scale solar and wind power plants can generate electricity between 3.6 and 4.4 cents per kilowatt-hour (¢/kWh) and 2.8 and 5.4 cents per Kwh respectively, far cheaper than nuclear which is between 11.8 and 19.2 ¢/kWh.

Among the three generation options reviewed, the study said nuclear power – which the country is currently prioritising – is right at the top in terms of expense, with total costs in 2019 of US$155 per megawatt-hour ($/MWh), most of which involves capital construction costs. On the low end are solar and wind power at US$40 and US$41 per MWh respectively.

The potential savings attained by generating a set quantity of electricity from renewables as a substitute for nuclear power, the study revealed, is close to 288 percent from wind and utility-scale solar PV.

For Mr. Williams, the evolving nature of renewable energy technologies and the continuous decline in prices of, in particular, solar and wind energy means that the initial disparity which existed between what is paid for conventional energy and renewable energy some years ago has been narrowed; and that global energy dynamics will further play out in favour of clean and sustainable energy sources.

Explaining further, Mr. Williams who is an engineer by trade said: “It makes a lot of sense to transition from conventional to renewables in terms of cost savings and environmental sustainability. The technology has evolved and is becoming even more cost-effective”.

AGI Energy Service Centre

The (AGI- ESC was set up to be a one-stop shop for renewable energy (RE) and energy efficiency (EE) training and consultancy services, especially relating to the adoption of RE/EE among AGI members and the larger Ghanaian public. The Centre is hosted by the AGI, with technical and financial support from the German Development Cooperation (GIZ).

The AGI-ESC is currently implementing market entry for renewable energy and energy efficiency projects to promote market development for renewable energy solutions, investment support for large electricity consumers, business strategies for electricity suppliers, and demand-oriented vocational qualifications for renewable energy and energy efficiency.

The breakfast meeting on renewable energy/energy efficiency technical support to commercial and industrial companies forms of one of the projects under the market entry for renewable energy and energy efficiency programme. It aims to invite interested companies, commercial and industrial companies, to apply for full transaction advisory services in renewable energy and energy efficiency projects, at a discount of 95 percent.

According to Baerberl Freyer, Chief Technical Officer-AGI-ESC, five companies will be selected based on their energy consumption to benefit from the discounted transaction advisory services.

She disclosed that the process is currently ongoing, and interested companies can contact the Association for further details on how to participate.