The drive toward more sustainable energy consumption and usage increased due to the glaring adverse consequences of using dirty fuels.
Globally, countries have committed to reduce greenhouse gas emissions in response to the urgency of redeeming climate change.
This commitment culminated in the 2015 Paris Climate Agreement, which aimed to limit global temperature to below 2℃ above pre-industrial levels with a stronger ambition to stay below 1.5℃.
Nigeria, a signatory of the Paris Agreement, has set ambitious targets, including an unconditional 20% emissions reduction by 2030 and a revised conditional 47% emissions reduction pledge.
The following article will focus on the country’s Energy Transition Plan (ETP), which plans to help the nation achieve carbon neutrality by 2060.
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As stated by its national government, in Nigeria, desertification in the north, floods in the centre, pollution and erosion on the coast and the associated socio-economic consequences all allude to the reality and grave impacts of climate change.
Consequently, bold action to limit the impacts of climate change must be undertaken urgently.
At the same time, in light of the rapidly rising population, accelerated development is needed to ensure improved living conditions for millions of Nigerians.
The next couple of decades present a unique opportunity to merge these two priorities; economic development and climate action, and to achieve in Africa’s largest economy, one of the world’s first true just transitions.
Nigeria's Energy Transition Plan (ETP)
Nigeria’s Energy Transition Plan (ETP) was unveiled shortly after, highlighting the scale of effort required to achieve the 2060 net zero target whilst also meeting the nation’s energy needs.
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Nigeria’s pathway to achieve carbon neutrality by 2060 is the Nigeria ETP, a home-grown, data-backed, multipronged strategy developed for the achievement of net-zero emissions in terms of the nation’s energy consumption.
The Nigeria ETP sets out a timeline and framework for the attainment of emissions’ reduction across 5 key sectors; Power, Cooking, Oil and Gas, Transport and Industry; within the scope of the ETP, about 65% of Nigeria’s emissions are affected.
Key ETP objectives:
- Lifting 100 million Nigerians out of poverty and driving economic growth.
- Bringing modern energy services to the full population.
- Managing the expected long-term job loss in the oil sector due to the reduced global fossil-fuel demand.
- Playing a leadership role for Africa by promoting a fair, inclusive and equitable energy transition in Africa that will include Gas as a “transitory fuel”.
- Streamlining existing and new government related energy transition initiatives.
According to Osagie Okunbor, Country Chair at Shell, “Nigeria has gas in abundance, around 202 trillion cubic feet of proven gas reserves and about 600 trillion cubic feet of unproven reserves. Harnessing these vast gas resources, and on time too, is key in the next decade of Nigeria’s existence”.
Furthermore, he stated that an intentional expansion of the off-grid power and renewables industry, utilising foreign financial support and technology transfer, is another path that could be pursued if the country wishes to have a successful energy transformation.
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Gas infrastructure value chain
Nigeria’s Just Path to Net Zero by 2060 | Yasmine Mohammed on Climate & Energy Transition
Key Insights of the Energy Transition Plan
Key ETP insights:
- Nigeria’s net-zero pathway will result in significant net job creation with up to 340,000 jobs created by 2030 and up to 840,000 jobs created by 2060 driven mainly by the Power, Cooking and Transport sectors.
- Gas will play a critical role as a transition fuel in Nigeria’s net-zero pathway particularly in the Power and Cooking sectors.
- Nigeria’s energy transition creates significant investment opportunities such as the establishment and expansion of industries related to solar energy, hydrogen, and electric vehicles.
- USD $1.9 Trillion is required to get to Net Zero by 2060, including USD $410 billion above projected usual spending. This additional cost translates to about USD $10 billion annually.
- Most of the effort will be needed in the power sector: extra CAPEX is needed to finance the power sector generation capacity (USD $270 billion), and the T&D infrastructure (USD $135 billion).
Nevertheless, significant savings in terms of fuel costs for power considering the switch to 90% renewables (USD -$121 billion) compensates for some of the CAPEX increases.
Complementary Actions Needed to Realize Nigeria’s ETP
- Identify (and support) low-carbon energy solutions that work for low-income Nigerians
Given the significant population living in poverty today, research on low-carbon energy solutions for low-income households is needed, especially in the rural and peri-urban areas of Nigeria, to identify appropriate and affordable low-cost technologies.
- Innovation in natural gas infrastructure development
Nigeria should therefore invest in developing dual-use infrastructure, for example, pipelines and distribution that can also be used for green hydrogen or synthetic fuels.
- Modernize biomass utilization
If Nigeria intends to continue biomass use, the government must outline a strategy for industrial cultivation in a sustainable manner and at a greater scale.
- Improve energy efficiency in small and medium enterprises (SMEs)
Given the role of SMEs in Nigeria’s industrial sector, large-scale adoption of energy-efficient technologies (e.g. advanced electric motors, fans, boilers, etc.) will be required to accelerate the transition to net zero by 2060 by reducing total power requirements in the sector.
- Focus on natural carbon removal solutions
Expanding the forest cover in Nigeria through large-scale afforestation and reforestation projects can offer a safer, cost-effective carbon sink in the short term while waiting on CCS technology to catch up.
- Explore strategies for an integrated energy system
Achieving the targets of Nigeria’s ETP cost-effectively requires increased integration of the electricity sector, transportation, cooling, and heating sectors to improve the efficiency and flexibility of the entire energy system as well as its reliability, adequacy, and cost.
- Incentivize change in transportation choices
Practical strategies will be needed to provide alternative pathways for Nigerians to change their travel behaviors. For example, high-speed intra- and inter-city rail running on renewable electricity needs to be developed as an alternative to private cars.
- Reduce dependency on foreign climate finance
Nigeria must look inwards to mobilize all the financial resources for its ETP before seeking external funding. It may be imperative for Nigeria, through its ministries of environment and foreign affairs, to explore debt-for-climate swaps as a means of raising domestic funds indirectly.
- Harmonize climate-related policies
To ensure that the ETP is implemented successfully, relevant institutions should coordinate to harmonize policies, strategies, and targets.
The Role of the Energy Transition Office (ETO)
Since the announcement, the Climate Change Act 2021 has been passed, the ETP has been fully approved by the Federal Government and an Energy Transition Implementation working group (ETWG) chaired by H.E Vice President Yemi Osinbajo (SAN), comprising of several key ministers and supported by an Energy Transition Office (ETO) has been established.
To help consolidate efforts towards energy transition, a private sector-focused roundtable was convened in Lagos on Friday 17 February 2023.
Organized by the Energy Transition Office, who are funded by SEforALL and the Global Energy Alliance for People and Planet, the meeting brought together stakeholders from the private sector and government to discuss the challenges and opportunities available in Nigeria's Energy Transition Plan.
Lanre Shasore, SSA to the President on Planning and Coordination, set the pace for the meeting by giving a brief history of the Energy Transition Plan.
This was followed by the welcome remarks from Dr. Muntaqa Umar-Sadiq, Head/Principal Finance Specialist at the Energy Transition Office.
He highlighted that the ETP lays out a comprehensive roadmap for Nigeria's energy transition, and emphasized the need for private sector engagement in the form of co-creation and alignment to raise the funds required to achieve the country's net zero goal by 2060.
Various players from the energy, finance and legal sectors participated in the meeting, as well as other experts who shared their insights and experiences on the challenges and opportunities presented by the energy transition.
The interactive session on Investment Opportunities in the Nigerian Energy Transition Plan featured at the roundtable.
The session was moderated by Tariye Gbadegesin, CEO, ARM-Harith Infrastructure Fund.
As part of the discourse, participants highlighted the need for innovative financing models and the role of public-private partnerships in recognising value chains across verticals.
In line with this commitment, a private sector working group was formed to support energy transition in the country.
After considerable deliberations and constructive dialogue, Somkele Awa-Kalu emphasized the ETO's openness to collaboration, which was also echoed by Dr. Muntaqa Umar-Sadiq, Head of the ETO.
Nigeria's Need to Transition to Renewable Energy Sources
To attain these climate goals, Nigeria must determine its optimal energy mix.
Despite their low adoption, renewable energy technologies, including solar power, wind, hydropower, bioenergy, geothermal energy, and ocean energy, can provide a significant proportion of the world’s energy needs.
To significantly reduce greenhouse gas emissions, the share of renewable energy sources must be more than 60 per cent of the global energy mix to reach the milestones in Net Zero Emissions by 2050.
Thus, strategies can be adopted to reduce carbon (CO2) emissions.
Fiscal Options and Investment Opportunities
For a meaningful move like an energy transition, finance plays a significant role. The costs of transitioning to renewable energy sources can be substantial, and financing can help make them more affordable.
On Tuesday, June 27, 2023, BudgIT hosted a 1-day event in Abuja to stimulate conversations on Energy Transition and Climate Financing.
The dialogue provided state and non-state actors with a platform to discuss the challenges and opportunities of the changing energy landscape.
This event also addressed the impact of climate change on Nigeria’s future, the fiscal options available to facilitate a successful shift, and the promising investment opportunities emerging in the renewable energy sector.
It featured a presentation and panel discussion on “Fiscal Options and Investment Opportunities for Energy Transition in Nigeria,” which was facilitated by BudgIT’s Senior Research and Policy Analyst, Enebi Opaluwa, with contributions from Dr. Muntaqa Umar-Sadiq, Head of the Energy Transition Office.
He also added that the Energy Transition Plan for Nigeria aims to achieve vessel access by 2030 in a specific and imperative manner.
This plan ensures Nigeria’s access to reliable, sustainable, and affordable energy sources while reducing reliance on fossil fuels and cutting carbon emissions.
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