In what seems to me like supersonic speed, less than 48 hours after the presentation of the budget statement and Economic Policy of government for the 2025 financial year, the finance minister presented to parliament 8 bills for the abolishment of certain taxes, notably amongst them was the Carbon emission levy (Act 1112) otherwise known as ‘Enwisie’ tax for repeal in fulfillment of campaign promised by his Excellency John Dramani Mahama.
The Emissions Levy Act (Act 1112) was passed in 2023 but took effect on February 1, 2024. This legislation imposed a levy on carbon dioxide equivalent emissions from specific sectors and vehicles. The sectors affected by the Enwisie levy, as Ghanaians affectionately called it, included construction, manufacturing, mining, oil, and gas.
The law required entities in these sectors to pay GHS100 per ton of emissions generated per month. The levy also affected owners of internal combustion engine vehicles, with rates based on vehicle type and engine capacity: Motorcycles and tricycles: GHS75 per annum; Motor vehicles, buses, and coaches up to 3,000 cc: GHS150 per annum; Motor vehicles, buses, and coaches above 3,000 cc: GHS300 per annum; and Cargo trucks and articulated trucks: GHS300 per annum.
The passage of the carbon emission tax and its implementation made Ghana one of the few countries in Africa to introduce a carbon emission tax of such kind. According to the report of the finance committee on the Emission Levy Bill, the levy was projected to generate GHC451,000,000 in revenue in the 2024 fiscal year.
The implementation of Act 1112 was aligned with Ghana’s broader environmental objectives, including the Climate Prosperity Plan (CPP), which aimed at addressing climate change while promoting economic growth. The CPP focuses on investments in renewable energy, sustainable infrastructure, and climate-resilient policies, targeting an Economic gain of USD 76 billion by 2050.
When the act was passed into law, the Association of Ghana Industries (AGI), Ghana Union of Traders Association (GUTA), Ghana Private Road Transport Union (GPRTU), and Institute of Energy Security (IES) raised several concerns about its negative implications of the levy when implemented. While their concerns were legitimate and were within their rights, they were not made to appreciate the several implications on the country’s efforts to ensure a carbon reduction-free environment.
Upon careful looking at the act, its repeal will cause the following:
Weakened Motivation for Emission Reduction: Without the levy, businesses and industries may feel less incentivised to reduce their carbon emissions. The levy likely acted as a financial push for companies to adopt cleaner technologies or reduce emissions to avoid penalties. Its removal could result in less urgency to invest in sustainable practices.
Reduced Financial Incentives for Green Projects: The carbon emission levy was likely implemented to generate funds that could be directed toward promoting sustainable practices, renewable energy projects, and green initiatives. Its repeal could reduce the financial resources available for these programs, slowing the transition to greener energy sources and technologies.
Challenges in Meeting International Climate Commitments: Ghana, as part of the global community, has commitments under international frameworks such as the Paris Agreement. The repeal of the carbon levy could make it more difficult to meet carbon reduction targets, affecting the country’s climate change efforts and possibly its international reputation in terms of environmental responsibility.
Economic Implications: While the repeal may ease some short-term financial burdens on businesses, especially those in carbon-intensive industries, it could ultimately harm long-term economic growth if the country doesn’t diversify its energy sector and improve environmental sustainability.
Public Perception and Environmental Awareness: The repeal may also influence public perception. The government’s decision could signal a lack of commitment to the environment, potentially diminishing public support for climate change initiatives and reducing awareness about the need to tackle carbon emissions.
Overall, the repeal of the carbon emission levy could hinder Ghana’s efforts to create a sustainable and carbon-neutral environment, as it may weaken both financial support for green initiatives and the regulatory pressure on industries to reduce emissions. However, the government could still pursue alternative measures to maintain momentum in climate action.
In conclusion, it is on record that in January 2023, Ghana became the second African nation, following Mozambique, to receive payments from the World Bank’s Forest Carbon Partnership Facility (FCPF) for reducing emissions through the REDD+ program. The FCPF paid Ghana $4,862,280 for reducing 972,456 tons of carbon emissions during the first monitoring period (June to December 2019). This payment is the first of four under Ghana’s Emission Reductions Payment Agreement (ERPA) with the World Bank, potentially totalling up to $50 million for reducing 10 million tons of CO₂ emissions by the end of 2024.
These funds were primarily allocated to farmer groups and local communities that have adopted sustainable farming practices, such as shaded cocoa systems, to prevent the expansion of cocoa farms into forest reserves. These practices aim to reduce deforestation and forest degradation while enhancing farmers’ livelihoods.
Also, in July 2023, Ghana began disbursing the $4.8 million received, benefiting over 240,000 farmers across 1,400 communities in the country’s seven cocoa-producing regions. The disbursement supports the adoption of climate-smart cocoa production methods and aims to further reduce carbon emissions.
So, the repeal of the act is not only considered a jolt in Ghana’s combative efforts against climate change, but it’s also put Ghana’s climate change fight in a factory setting mood in terms of the country’s commitment in the fight against climate change, most especially commitment to sustainable cocoa production and forest conservation.
President of France, Emmanuel Macron, once said, “By polluting the oceans, not mitigating CO2 emissions and destroying our biodiversity, we are killing our planet. Let us face it, there is no planet B.”
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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
