Introduction
Climate Change remains one of the greatest threats to human health in recorded history and given the current climate crisis the earth is experiencing; world leaders have actively undertaken short and long-term actions to support low-carbon economic growth and deliver climate goals that are sufficient to mitigate climate change effects. Nigeria has taken strides to also align with the global trend.
On the pathway to achieving net-zero carbon emissions by 2060, Nigeria curated an Energy Transition Plan ahead of the Conference of Parties (COP) 27 that showcases the nation’s leadership role in attaining a just and equitable climate future for Africa.
On the 24th of August 2022, the Energy Transition Plan (ETP) was launched as a roadmap to tackle the dual crisis of energy poverty and climate change. This ETP was approved by the Federal Executive Council of Nigeria on 2nd February 2022, and it serves as the national strategy document for Nigeria’s transition to clean energy, also requiring the mobilization of finance to kickstart the implementation of the nation’s energy transition.[1] Nigeria is thus far commendably the only African country with an Energy Transition Plan.[2]
The objectives of the Energy Transition Plan include the following:[3]
Serving as a guide to Nigeria in its commitment and ambition to achieving carbon neutrality
Reducing energy poverty among Nigerians, and ensuring reduced poverty rates among 100 million people
Driving economic growth in all commercial industries and sectors in the country
Successfully managing the long-term job loss in the petroleum sector that will arise from decarbonization
Creating awareness of energy transition planning in other African countries to achieve a just and equitable climate future for all
Creating novel opportunities for solar energy companies to obtain results-based finance from the Universal Energy Facility
Mobilizing support from international partners for the country’s energy transition by showcasing existing support for data-driven energy transition planning from international partners
Increasing electricity access for Nigerians, achieving universal power access by 2030
Mobilizing investments and private sector involvement by creating significant market opportunities in the energy transition process
Pursuant to the Energy Transition Plan, Nigeria announced that it will require $1.9 trillion spread annually over a long period of time, including $410 billion above projected business-as-usual spending to deliver and achieve the goals on renewable energy, power sector reforms, clean cooking, etc., by 2060. This translates to a cost of $10 billion annually.[4]
At the virtual launch of the Plan, it was announced that the Inter-Ministerial Energy Transition Implementation Working Group (ETWG) supported by the Energy Transition Office (ETO) was in discussions with international partners to secure an initial $10 billion support package ahead of COP 27, to reach its anticipated target. Due to this, international development banks such as the World Bank and the US Export-Import Bank have committed $3 billion ($1.5 billion each) towards the energy transition plan.[5] The fund is to be used to support ‘policy and institutional’ reforms.[6]
Priority Areas of the Energy Transition Plan
The Energy Transition Plan (ETP) establishes that the country’s net zero targets will focus on technologies that reduce carbon emission rates across the following sectors that contribute 65% of Nigeria’s emissions:[7]
The Household Cooking Sector
Here, emissions reduction will be driven primarily by a shift to electricity and biogas-based cooking mainly in rural homes post 2030.
There will be a speedy replacement of traditional firewood, kerosene and charcoal by Liquefied Petroleum Gas (LPG) to achieve SDG7 by 2030
The Oil and Gas Sector
Emissions reduction will be enhanced using novel technologies such as carbon capture and storage (CCS), direct air capture, hydrogen fuel, etc.
The Transport Sector
Emissions will be largely decreased by the uptake of electric vehicles (EVs) and use of clean energy
The Power Sector
Emissions in the power sector will be reduced by increases in the primary use of solar energy to replace natural gas as a transition fuel.
There will be a transition away from diesel/petrol generators which account for the bulk of Nigeria’s current electricity generation capacity, an initial expansion of gas generation capacity to establish baseload capacity to meet increased electricity demand and integrating renewables into the energy mix.
Industry
Emissions are to be reduced by approximately 97% despite industrial growth due to decarbonization efforts in cement and ammonia production, and there is to be a 100% shift to zero emission fuels for heating.
Despite these targets, it is noteworthy that the ETP further recognizes that the 2060 net zero emissions target may be affected by the slower replacement of firewood stoves by less emitting cooking technologies in buildings; lower rate of adoption of EVs in transport; delayed implementation of hydrogen furnaces in the industries; etc.
The following are also expected by the ETP in relation to the aforementioned sectors:
The 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 serve as the transition fuel in Nigeria’s net-zero pathway particularly in the Power and Cooking sectors
The energy transition will create significant investment opportunities such as the establishment and expansion of industries related to solar energy, hydrogen, and electric vehicles.
Matters for Consideration
The ETP is said to require an estimated sum which when calculated for the period running up to 2060, amounts to approximately $10 billion (USD) per year supported by external investors and partner organisations. While these external financing efforts are much needed and welcome, Nigeria will also need to employ innovative means of funding the ETP within its territory.
As has been reiterated, Africa is highly prone to the effects of climate change. Nigeria is not left out of this danger. As alluded to in the ETP, “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”. Nigeria must equally take responsibility and bold steps towards financing the ETP. The ETP coupled with Nigeria’s Climate Change Act 2021 is a perfect collage to introduce the placement of a price on carbon and a replica of the Clean Development Mechanism within Nigeria.
Putting a price on carbon places some form of responsibility on high emitting entities as well as the government to take action towards achieving the ETP, Nigeria’s NDC and UN’s climate goals
The funds generated from these organisations can go into a pool of fund that is channelled towards achieving the ETP
As an alternative means of offsetting excess emissions by entities, the replica of the Clean Development Mechanism within Nigeria would allow emitters to initiate zero emission programs/initiatives within a taxonomy created for this purpose and falling within the ETP priority areas
Unused carbon allowance may be traded within entities to incentivise a drastic emission reduction; as profits can be earned from trading excess allowances
Trading unused carbon allowance within entities could create a situation where organisations switch to On-site sustainable energy sources to reduce carbon emissions, thus achieving both emission reduction and increased utilisation of renewable energy sources.
Conclusion
The ETP is a bold assertion by Nigeria indicating her commitment to climate action and UN Climate goals. The indicated priority areas, power, transportation, cooking, oil and gas, and industry reflect the highest emitting sectors of the economy. However, they also require huge capital outlay for the realisation of emission reduction as the ETP envisages. Whilst the financial efforts of international organisations and partnerships cannot be downplayed, Nigeria must also consider ingenious ways of stimulating finance within its territory for full realisation of the ETP within the set timeline.
[1] SE4ALL, Launch of Nigeria’s Energy Transition Plan. Available at https://www.seforall.org/events/launch-of-nigerias-energy-transition-plan
[2] PWC, Decarbonizing Nigeria’s Economy. Available at https://www.pwc.com/ng/en/assets/pdf/decarbonising-nigerias-economy.pdf
[3] SE4ALL, Launch of Nigeria’s Energy Transition Plan. Available at https://www.seforall.org/events/launch-of-nigerias-energy-transition-plan
[4] Nigeria Energy Transition Plan, available at https://www.energytransition.gov.ng/#Finance
[5] The Africa Report, Nigeria’s Energy Transition Plan needs $410bn by 2060 to be successful. 26 August 2022. Available at https://www.theafricareport.com/235586/nigerias-energy-transition-plan-needs-410bn-by-2060-to-be-successful/
[6] Ibid
[7] PWC, Decarbonizing Nigeria’s Economy. Available at https://www.pwc.com/ng/en/assets/pdf/decarbonising-nigerias-economy.pdf ; Nigeria Energy Transition Plan, available at https://www.energytransition.gov.ng/