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Ghana’s decades-old ambition to construct an built-in aluminium business faces a brand new hurdle: the clear power transition

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It has been greater than 60 years since Ghana’s first post-independence chief Kwame Nkrumah first mooted the concept Ghana ought to produce aluminium from the nation’s ample provide of bauxite.

Beneath the Volta River Venture, Nkrumah’s imaginative and prescient was to assemble a dam on Ghana’s Volta River to supply devoted electrical energy to a newly constructed smelter. The smelter was to be run by the Volta Aluminium Firm (Valco) within the new industrial metropolis of Tema.

The smelter can be linked to a refinery to course of Ghana’s bauxite, at present estimated at 900 million tonnes. Ghana has the second largest reserves in Africa after Guinea.

Successive Ghanaian governments have pursued this technique over the a long time. The latest push got here in 2017 when the federal government launched into its newest drive to develop an aluminium producing capability.

Since then, the Ghana Built-in Aluminium Improvement Company (Giadec) has invested in new mines and is seeking to associate with overseas and home firms to actualise a harmonised aluminium business, together with an alumina refinery.

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The logic has at all times been that heavy industries that flip pure sources into helpful merchandise are important for structural transformation. That’s, shifting an financial system “from low productiveness and labour-intensive actions to increased productiveness and skill-intensive ones”.

Such transformation can also be related with rising wages and dwelling requirements. Heavy industries can even cut back reliance on imports.

Current works have recognized gaps in geography-specific analysis on industrial decarbonisation in growing economies. Sub-Saharan Africa is especially under-researched, with analysis solely actually inspecting the case of South Africa.

We examined Ghana’s long-standing challenges to the dream of a completely developed aluminium business. We additionally assessed the latest makes an attempt to grasp these plans towards the backdrop of the power transition and industrial decarbonisation.

We discovered that new uncertainties and challenges stand in the way in which of Ghana’s newest efforts to develop an built-in aluminium business. These are linked to the unfolding international power transition agenda and shifts in direction of “inexperienced” manufacturing.

Why aluminium

Aluminium is each a constraint to and an enabler of a web zero future.

On the one hand, it has quite a few power transition functions, from photo voltaic panels and wind generators to electrical energy cables and batteries.

However aluminium can also be the second most carbon-intensive business, after metal. It accounts for about 4% of world emissions. Emission-reduction applied sciences are pricey and, in lots of instances, nonetheless being developed.

Challenges – outdated and new

The obstacles Ghana has confronted in its aluminium business over the a long time have included a scarcity of investments in new mines, lack of refinery, restricted electrical energy for smelting, and a scarcity of investments to improve the present Valco smelter.

Extra lately, different constraints have come into play that make it laborious for peripheral economies like Ghana to develop and maintain aggressive aluminium industries.

Firstly, they aren’t financially ready to make use of the most recent sustainable manufacturing applied sciences, corresponding to carbon seize, use and storage and inexperienced hydrogen. These are wanted to enhance power depth and cut back emissions.

Secondly, Ghana faces powerful new situations, often called “inexperienced taxonomies”, being set by key export markets within the international north. Nations or buying and selling blocs just like the European Union are demanding that importers in focused heavy industrial sectors monitor and declare emissions embedded in merchandise. They’re additionally required to purchase Carbon Border Adjustment Mechanism certificates to offset such emissions. The mechanism, which has already been launched on a trial foundation, will cost levies from January 2026.

There are robust critics of those mechanisms, with some arguing that they threaten Africa’s sustainable growth. These arguments are unlikely to see the EU dropping these measures.

The third impediment that Ghana faces revolves round how you can make its refineries and smelters produce competitively priced aluminium. The price of energy is a sticking level because it has been in prior years.

In keeping with Ghana’s lately revealed Nationwide Power Transition Framework, pure gasoline will function Ghana’s main transition gasoline. The federal government argues that it might probably present the bottom load electrical energy that Ghana requires for industrialisation.

However selecting gasoline because the power answer for Ghana’s aluminium chain might jeopardise the export potential of the aluminium it produces. About 80% of Ghana’s aluminium is exported to Europe and could possibly be subjected to carbon taxes if manufacturing is powered by gasoline.

Hydro electrical energy would, in lots of respects, be the best answer. It’s Ghana’s least expensive and greenest power supply. And it could permit the nation to compete in markets regulated by carbon concerns.

However this isn’t as simple as it could appear. If Valco and a brand new smelter have been to function at envisaged ranges of manufacturing it could take away nearly all of the hydropower output of Akosombo Dam from Ghana’s broader electrical energy combine. The hydropower additionally performs a key position in bringing down general electrical energy costs.

Thus, whereas hydro electrical energy could also be a technically good answer, it is probably not politically acceptable in a rustic the place electrical energy costs are a key electoral situation.

Learn extra:
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Lastly, different issues are rising round plans to mine bauxite in a few of Ghana’s final remaining inexperienced forests, together with the Atewa Forest Reserve.

Nationwide and worldwide civil society organisations and environmental activists are resisting the transfer. Many native companies assist it, nonetheless, due to the potential financial features a mine and refinery would convey.

Learn extra:
Ghana’s pact with China to discover bauxite threatens a novel forest

These are a few of the trade-offs that policymakers should contemplate.

Shifting ahead

Collectively, these points could frustrate Ghana’s ambitions as soon as extra.

At a global degree, peripheral economies like Ghana want readability about how specific power applied sciences might be categorised.

Lastly, local weather financing and inexperienced expertise switch pledges from developed to growing economies have to be honoured.

We advise the Ghanaian authorities can overcome a few of these points by dialogue with stakeholders and being frank concerning the trade-offs concerned. However a nationwide dialogue about advantages and prices is simply potential if it’s clearer what decisions round power might be made.


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