While the NDC’s move to scrap various taxes aims to ease economic pressures on citizens, IPPG argues that retaining the emissions levy is crucial for financing climate action and fulfilling the NDC’s promises on green growth, renewable energy, and climate change mitigation.

Introduced in December 2023 through the Emissions Levy Act (Act 1112), the emissions levy targets carbon dioxide equivalent (CO2e) emissions from key sectors such as construction, manufacturing, mining, energy, and transportation. The levy was designed to serve as both an environmental tool and a source of funding for climate-related projects. However, IPPG highlights a critical flaw in the levy’s implementation under the current administration: the absence of a clearly defined allocation mechanism for the revenue generated.

Seth Owusu-Mante, a Research Fellow at IPPG and co-author of the policy brief, emphasized that without a strategic plan for reinvesting the funds into clean energy initiatives and climate action, the levy risks becoming just another general tax. “The levy should not be viewed as an additional burden on the economy but as a transformative tool to address climate challenges,” Owusu-Mante stated. “Reinvesting the revenue into climate finance is essential to building a green economy that benefits all Ghanaians.”

Ghana’s vulnerability to climate change is increasingly evident. Rising temperatures, unpredictable rainfall patterns, and extreme weather events are already affecting agriculture, water resources, health, and infrastructure, disproportionately impacting rural and marginalized communities. The NDC’s manifesto acknowledges these challenges and outlines actions to combat them, but the lack of consistent domestic financing mechanisms remains a major obstacle.

IPPG’s policy brief advocates for the creation of a dedicated climate fund using the revenue from the emissions levy. This fund could provide a sustainable and predictable source of finance to support Ghana’s climate resilience initiatives, including investments in climate-smart agriculture, water management, and infrastructure. “A dedicated climate fund would reduce Ghana’s reliance on external aid and give the country more control over its climate future,” Owusu-Mante added.

The brief also outlines key recommendations for how the climate fund could support the NDC’s manifesto promises. One such initiative is incentivizing companies to adopt environmentally responsible practices under the 24-Hour Economy Policy. This could be achieved through tax rebates, grants, and subsidies, encouraging the use of electric vehicles, solar panels, and energy-efficient technologies. “By offering incentives, the government can encourage industries to make long-term investments in sustainable practices, ultimately driving a low-carbon economy,” IPPG stressed.

Additionally, the climate fund could be used to scale up renewable energy projects, such as solar and wind farms, waste-to-energy systems, and off-grid solutions, which would help address Ghana’s energy challenges and transition the country to a sustainable energy mix. This aligns with the NDC’s goals of expanding renewable energy and improving energy access for all Ghanaians.

IPPG’s recommendations highlight the need for a strategic and pragmatic approach to the emissions levy. Retaining the levy and repurposing it for climate action will require clear communication with stakeholders, transparent governance structures, and public consultations to build trust and ensure broad support. Strengthening emissions verification systems, allocating funds efficiently, and ensuring that incentives are aligned with national climate goals must remain top priorities for the government.

By reimagining the emissions levy as a tool for climate finance, Ghana can take significant steps toward a sustainable, green economy, creating opportunities for both environmental protection and economic growth. The IPPG’s call for the NDC to reconsider its stance on the levy is an urgent reminder of the need for bold, forward-thinking policies that align economic development with climate resilience.