Why the Repeal of Emissions Levy Act 1112 Could Impact Our Climate Action Goals

In just two days after Ghana’s finance minister presented the 2025 budget, eight bills were introduced to Parliament, aiming to remove certain taxes, including the carbon emission levy, popularly known as the ‘Enwisie’ tax. This proposal fulfills a campaign promise by President John Dramani Mahama.

The Emissions Levy Act, which came into effect on February 1, 2024, targeted various sectors like construction, manufacturing, mining, and transportation. It charged businesses GH₵100 for each ton of carbon dioxide emitted. Vehicle owners faced annual fees based on engine size; for instance, smaller vehicles paid GH₵150, while larger cargo trucks paid GH₵300.

Ghana was among the few African nations to implement such a levy, which aimed to generate GH₵451 million in revenue during its first fiscal year. This tax was part of the country’s Climate Prosperity Plan, promoting renewable energy and sustainable infrastructure. Ghana aims to gain USD 76 billion by 2050 through these initiatives.

However, various organizations voiced concerns regarding the levy. The Association of Ghana Industries and others worried about its negative impacts, not fully recognizing its role in promoting environmental responsibility.

The repeal of this carbon levy could lead to several key issues:

1. Less Motivation for Emission Reduction: Without the levy, companies may feel less compelled to cut emissions, slowing down investments in cleaner technologies.

2. Funding Reduction for Green Projects: The funds from the levy supported sustainable initiatives. Its cancellation could stifle efforts to transition to greener energy sources.

3. International Commitments at Risk: Ghana has obligations under agreements like the Paris Agreement. Repealing the levy might hinder progress towards meeting these carbon reduction targets.

4. Economic Considerations: While some businesses may benefit in the short term, the long-term effects of neglecting sustainability could harm economic growth.

5. Shifts in Public Perception: This move may signal a reduced commitment to environmental issues, affecting public support for climate initiatives.

Ghana has made progress in its fight against climate change. In January 2023, it became the second African country to receive payments from the World Bank’s Forest Carbon Partnership Facility for reducing emissions. Ghana received approximately $4.9 million for cutting nearly a million tons of carbon emissions through sustainable agriculture practices. These funds have already supported over 240,000 farmers in adopting methods that align with climate goals.

The repeal of the carbon tax isn’t just a setback; it’s a significant shift in the nation’s commitment to combating climate change and promoting sustainable agriculture. As President Macron once stated, “There is no planet B.” Ghana’s actions will influence not just its environment but also its international standing in climate discussions.

By understanding these implications, it’s clear that prioritizing sustainable policies is essential for Ghana’s long-term health and prosperity.

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