In most developing countries more than 25% of total energy use comes from biofuels. In Ghana, the figure is between 70-80%. Bioenergy is mainly used for cooking and heating, and is also important in rural or cottage industries. As a developing country, Ghana's economic growth remains coupled to the availability and supply of energy. About 29% of this energy is obtained through hydropower and imported petroleum. The two hydropower installations generate about 1102 MW annually mainly for domestic and industrial uses. At the current 3.0% average annual population growth rate, a population of about 35 million is expected by 2025. Coupled with the country's efforts to promote industrialisation, future energy demand is expected to increase severalfold. This paper provides an overview of Ghana's current energy situation and discusses the role of bioenergy in the future energy demand of the country. The paper concludes with a recommendation for a major shift in energy policy to accommodate the conversion of biofuels into versatile energy carriers in a decentralised system to meet the energy requirements of the people and to provide a basis for rural development and employment.