Drivers of Industrial Final Energy Consumption in Ghana: A Sectoral Decomposition Analysis of Energy Supply and Demand Drivers.

Energy plays a crucial role in determining Ghana's socioeconomic growth. The rapid growth of demand and the increasing difficulties of energy supply pose a significant challenge to Ghana’s efforts to achieve universal energy access. This study aims to assess the drivers of industrial final energy consumption in Ghana using a sectorial decomposition of energy demand and supply drivers. It applies the additive Logarithmic Mean Divisia Index (LMDI) to decompose industrial final energy consumption in Ghana between 2000-2022. Changes in Final Energy Consumption (FEC) were analyzed by quantifying the contributions from three different factors: activity effect, structure effect, and intensity effect. FEC increased significantly throughout the period with the activity effect being the major promotor. The structure effect promoted and inhibited FEC growth within the 2000-2022 period while the intensity effect largely contributed to a drop in final energy consumption. The activity effect resulted in the net growth of FEC by 136,403 TJ. The effect of the economic structure was oscillating resulting in a net growth of FEC by 9,635.45 TJ. As an inhibitor to FEC growth, the intensity effect resulted in a decline of FEC by 114,081 TJ. The results of this study can help the government to reduce energy consumption by encouraging and promoting energy-saving practices, and incentivizing the adoption of green technologies can effectively curb wasteful energy consumption and foster a culture of responsible energy usage across all sectors of the economy.