Ghana plans to significantly increase its climate financing by actively participating in global carbon markets. This initiative relies on the country's vast forest resources and developing policy frameworks to attract new investments. However, critical gaps in technical capacity, especially in project development and robust measurement, reporting, and verification (MRV) systems, threaten to slow this ambitious progress.
Baba Seidu Salifu, the Minister of State for Climate Change and Sustainability, confirmed that weaknesses in these technical areas and regulatory frameworks remain major obstacles. These challenges persist even as the government works to expand Ghana's involvement in global carbon trading. The country sees carbon markets as a vital component of a wider strategy to diversify its climate finance sources. Access to traditional concessional funding is becoming increasingly difficult for developing nations.
This push for carbon market participation is part of Ghana's broader economic strategy. It supplements efforts to boost renewable energy deployment and build climate-resilient infrastructure. Data indicates a global trend where developing economies are increasingly turning to carbon markets. This offers an alternative source of financing when conventional funding channels face tightening restrictions. The government acknowledges that scaling up its gains depends on quickly addressing these technical shortcomings.
Minister Salifu emphasized the government's commitment to building strong institutional systems to manage climate finance sustainably. He pointed to efforts in strengthening accreditation processes. Ghana is also actively developing project pipelines and improving its readiness for carbon markets. The country secured an Article 6 agreement with Switzerland in 2023. Under this agreement, Ghana will provide internationally transferred mitigation outcomes (ITMOs) from projects. These projects focus on clean cooking and waste management.
This deal with Switzerland is a test case in Africa for how developing countries can earn money from reducing emissions. It operates under the United Nations Framework Convention on Climate Change. Ghana has also advanced its REDD+ programmes aimed at reducing emissions from deforestation and forest degradation. These initiatives have already generated carbon credits linked to forest conservation. Payments have been secured through results-based financing supported by the World Bank and other international partners. However, these volumes are currently modest compared to their full potential.
Minister Salifu explained that donor fatigue and declining grant-based support compel countries to explore new financial instruments. Ghana still heavily relies on loan-based climate finance. This reliance raises concerns about debt sustainability and fiscal pressure. The government seeks to shift towards more grant-based and concessional funding. The Office of the Minister has initiated partnerships covering climate finance mobilisation, renewable energy, and sustainable infrastructure. These include non-binding cooperative agreements designed to prepare for future investment flows.
The Office has also connected local financial institutions, such as the Ghana Infrastructure Investment Fund (GIIF) and the Ghana Investment Promotion Centre (GIPC), with international partners. This aims to create a pipeline of bankable climate projects across various sectors. These sectors include renewable energy, agriculture, and climate-resilient infrastructure. However, translating these early frameworks into tradable carbon assets requires credible MRV systems and swift regulatory clarity. Competition for carbon finance among African nations is intensifying. Slow and complex accreditation processes for major climate finance mechanisms also delay funding access. These mechanisms include the Green Climate Fund and the Adaptation Fund. The government plans to strengthen monitoring, accelerate accreditation to global climate funds, and deepen carbon market participation. These steps are crucial for its broader economic transformation.