Introduction
Access to energy has been associated with industrialidation and prosperity, while the lack of it has been associated with endemic poverty. This is a reason for the clear difference between the performance of most African countries and their western counterparts. In addition, increasing world population triggers conversations on issues of sustainability, especially in matters of food production, water supply, transportation and energy. Hence, conversations have shifted to aligning with the UN SDG goal 7 “Ensure access to affordable, reliable, sustainable and modern energy for all”, which aims, to limit global temperature to 1.5°C degrees.
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In Nigeria, today, many households in rural areas, still use kerosene, firewood, sawdust, and coal. Those in urban areas are not innocuous, as poor electricity supply and lack of efficient public transportation system have led to the increased use of generators and cars with higher carbon emissions. Only recently, has there been discussions on the use of compressed natural gas (CNG) as an alternative to gasoline for our vehicles. However, the driver for this discuss is cost and the mode of operation of these CNG vehicles in the country raises safety concerns. Meanwhile, the infrastructure required for the effective use of CNG is still lacking in most countries.
As the world is transitioning from high carbon energy sources to “cleaner, greener” energy sources, it is important that Nigeria should not to be left behind.
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Over 80 per cent of global energy mix is from fossil fuels. The impact on the environment calls for a reduction of carbon emissions to tolerable levels, the world may need to do away with 80 per cent of coal deposits, 50 per cent of oil reserves and 40 per cent of gas deposits without extraction, according to a 2015 report by the International Energy Agency (IEA). Ultimately, transitions to cleaner energy sources are determined by economy and technological advancements. However, the determinants of those fundamentals are government policies.
Today, I wish to explore the energy transition in Nigeria, addressing the challenges, opportunities, risks and the critical role of policies tailored to local nuances, especially for the Niger Delta people and Nigeria.
Climate Change, Global Warming, Carbon Budget, Sustainable Energy, Energy Transition…What Are They?
The United States National Aeronautics and Space Administration (NASA) defined climate change as “a long-term change in the average weather patterns that have come to define Earth’s local, regional and global climates”. It was argued that triggers for climate change in the 20th century were largely due to human activities, especially the utilization of fossil fuels. Carbon emissions have been associated with the trapping of associated gases in the atmosphere raising the temperature of the earth’s surface and associated sea level rise due to polar ice melting that may lead to flooding. This rise in temperature due to fossil fuel utilization by humans is called global warming.
Carbon budget is a concept used to quantify how much carbon associated gases are emitted by governments, companies and societies to understand how much may need to be cut to reduce the amount of emissions in the society. In reducing the carbon budget in order to reduce greenhouse gas emissions and eventually tackling sporadic climate change, societies are shifting towards sustainable and clean energy sources, i.e., energy sources that can meet the current and future needs of a society, without ever running out, and emitting less greenhouse gases compared to non-renewable fossil fuel sources. The shift from fossil fuels to renewable, sustainable and clean energy is the crux of energy transition.
Why does it matter?
Why should we care about climate crisis in Nigeria? Afterall, Nigeria’s contribution to global carbon emissions is just 0.33 per cent, and we are not as industrialised as the countries responsible for contributing significantly to carbon emissions? Well, our Lake Chad has lost 90 per cent of its water volume since 1960 – increasing the risk of food insecurity, malnutrition and other humanitarian crises for a part of our population.
Every year, Nigeria now experiences flooding with devastating consequences. In 2022, a UNICEF Report cited that about 1.5 million children needed humanitarian assistance due to devastating floods that affected 34 out of 36 states. These floods led to cases of waterborne diseases. On 13th November 2024, Reuters reported that heavy rains and floods ruined more that 1.5 million hectares of farmland in Nigeria. In COP29 held in Baku, Azerbaijan, a member of the Nigerian Delegation informed an audience that more than 40 million people in the Niger Delta had been adversely affected by sea level rise with huge chunk of land lost. We can detail more tales of woes, but it is evident that we have serious climate-induced crises on our hands.
The Financial Risks for Niger Delta and Nigeria
Oil has been a mainstay of Nigeria’s economy for many years after it was first discovered in 1958, in Oloibiri, in commercial quantity. We are all living witnesses to the degradation of the Niger Delta environment caused by the extraction of hydrocarbons. The major threat of the global energy transition to the Niger Delta and Nigeria is a depleted foreign exchange treasury to drive other sectors of the economy, as the demand for oil resources may likely reduce in the coming years. A pointer to this is the economic impact of a slump in oil prices on our treasury in the past, with the uncertainty in benchmarking national budgets based on international oil pricing. We also recognise that governments must decide to make significant investments into oil and gas production in the face of uncertainty with the attendant risk of price reduction or reinvest their wealth into other areas they have comparative advantage or research into efficient energy use. For example, rail is driven by electricity in many industrialised countries and the demand for electric vehicles remained strong, and most European countries intend to ban the sale of petrol and diesel-powered vehicles by 2035.
Using the scenario of energy transition, the best way to deal with it for Nigeria is to share risks among many investors as we go into an uncertain future, should there be a terminal drop in oil prices. If this is the idea, the Nigerian government can increase the pace of licensing a number of companies interested in exploration and production, especially local companies, settle litigations surrounding oil blocs allocations, incentivize indigenous producers, and set up business-friendly regulations. When enough income is generated, it can be injected into other sectors of the economy. The key issue here is speed.
Another risk for Nigeria is being lagged behind in the conversation and implementation of strategies towards sustainable energy security. And we must always take note of the fact that the question of energy security, is indeed a question of national security. This may be due to Africa contributing less greenhouse gases compared to Asia, Europe and the Americas; lack of technological know-how or lack of interest because other fundamental issues have not been tackled.
Lack of finance to tackle climate-related issues is a huge challenge. For example, development of climate-resilient infrastructure is a demand for huge financial undertaking. Conscious efforts have to be made in light of this challenge. To encourage investors, we need to strengthen and streamline our regulatory framework, show consistency in government policies, improve our standards, and even cultural interestedness in cleaner energy solutions.
While countries in Africa receive humanitarian assistance from donor agencies and developed countries, these aids are simply not enough. Alternative and emergency sources of funds are needed in this regard. This was evident from the just concluded COP29 where the Least Developed Countries (LDCs) got only $300 billion annually, pledged by the Developed Countries, who are the biggest pollutants. To help the LDCs address climate change challenges, the LDCs had proposed $1.3 trillion annually, as grants and not loans. The rich nations insisted that they will agree to $1.3 trillion annually, by the year 2035, about 11 years from now. However, the pertinent question to ask is: when will the pledged paltry sum of $300 billion annually, become CASH. Without a clear definition of what constitutes this Finance, the mantra now is “I Pollute, You Pay”.
Opportunities
Nigeria’s current energy mix is a combination of natural gas fired power stations, coal, and hydroelectricity. The current challenges of our electric system are insufficient raw material supply – especially to our gas stations, lack of power generation capacity, centralization of the power grid, obsolete transmission infrastructure, and frequent equipment vandalism. All these lead to frequent collapse of our grid and consequently nationwide power outages.
According to the Rural Electrification Agency (REA), about 86 million Nigerians lack access to grid electricity, one of the highest number by global standards. Based on the Nigerian Electricity Act 2023 that liberalizes the generation, transmission and distribution of electricity, it is helpful for state governments to take advantage of this law, join forces with the private companies and provide energy security for their people.
Thinking of a sustainable energy mix requires a mix of sources. For example, in the Netherlands, wind, solar, and biomass contribute 18 per cent, 15 per cent, and 7 per cent, respectively; with the largest contribution from fossil fuels. On my visit to Martinique in May 2019, I saw a large solar farm with solar panels in one of the cities. The climate patterns of Martinique is not too dissimilar to Nigeria’s, especially due to the country’s proximity to the equator, giving Nigeria latitude as one of the countries with the most exposure to sunlight. Despite the abundance and intensity of sunlight, Africa hosts only 1 per cent of global installed solar facilities. One way we can provide sustainable energy to rural areas and even power homes, streetlights and hospitals is coming up with dedicated solar farms to serve that interest. On Friday 6th December, 2024, the governor of Oyo State inaugurated the first phase of 11 megawatt Ibadan Hybrid Power Plant Project, the first of its kind in the state. The first phase of the project comprises 1 megawatt solar-powered system and 4 megawatt gas-powered generating system. The governor, during the inauguration, had stated that the state was aiming at a 500 megawatt solar power generation project to meet domestic needs and sell to neighbouring countries. This initiative is highly commendable and should be replicated on a higher scale by other state Governors.
On Tuesday, 19th March, 2024, the Nigerian vice president, Kashim Shettima, had stated that the Nigerian Sovereign Wealth Fund planned to build a 20 megawatt solar power plant, a first step towards an ambitious 300 megawatt project. A review report by ThisDay had around June, 2024, indicated that the Nigeria Sovereign Insurance Authority had completed the development and construction of a 10 megawatt solar energy project in Kumbotso Local Government Area in Kano State. The report also highlighted several ongoing solar energy projects, including the 5,600 megawatt Argungu Solar Energy Park in Kebbi State, expected to come on stream in 2027; the 1,000 megawatt Jigawa Solar Project and the 350 megawatt Lafia Solar Project. Most of the solar projects are at the announcement stage. The Rural Electrification Agency (REA) is at the forefront of driving solar mini-grids and solar systems to serve rural communities. The highlights are indicators of economic opportunities resident in such projects.
In terms of wind energy, the first wind farm in Nigeria, a 10 megawatt utility-scale wind farm, was commissioned in Katsina State in 2020. Due to the stronger wind-patterns in coastal areas, wind energy can also be harnessed therefrom. Nigeria has an abundance of surface and ground water sources comprising an estimated 87 billion cubic meters of ground water resources and 215 billion cubic meters of surface water, with more than 853 km of coastland and an annual rainfall of 3,500 mm. Inland water sources like the River Niger has made the country an attractive source for developing hydroelectric energy sources in the Kainji Power Station and Jebba Power Station. Because of the movement of waves, tides, energetic wind patterns, wind power can be harnessed to capture and convert the wind energy to generate electricity for the coastal and adjoining areas. Wind energy in the Niger Delta can be harnessed to produce electricity for the locals, especially offshore wind farms, on a large scale. The proximity of communities where the energy is consumed and the availability of off-grid infrastructure will likely reduce energy costs and provide energy security for coastal communities.
Several countries are already considering geothermal energy, including a country like Kenya. In Nigeria, we have sources of geothermal energy, like Ikogosi Warm Springs in Ekiti State, and Wikki Warm Springs in Bauchi State. The Mambilla Plateau hydroelectric power project is another huge opportunity. Extant laws may need to be looked at to encourage these approaches. The point to highlight here is that the resources are available, and in abundance. Managing our energy resources efficiently can help Nigeria attain climate neutrality even faster than some countries.
Biofuels from biomass are also being researched as an alternative source of powering vehicles, engines and machines. Biomass sources like trees, shrubs, agricultural waste, and home waste can be converted to energy. Waste generated from breweries is a good feed for pigs for those into pig farming. Academics in Nigeria can consider research into conversion of biomass to biofuels using thermochemical methods, biotechnology and biochemical conversion. Utilising biomass as energy sources requires a roadmap and education of local communities on efficient methods to produce biofuels. Also, companies can start considering bio-refineries and bio-engines utilizing such fuels can be in the long term plans.
Still on biofuels, a rapidly increasing Nigerian population means more waste would be generated. Managing waste in Nigeria has been a historical challenge in urban and rural areas. Generated organic waste is usually left to decay or buried in landfills. In areas close to such landfills, health problems arising from effluents have been reported as well as the infiltration of pollutants in groundwater supply. An area of strength is efficient waste management strategies and recycling practices to reuse some of the waste as manure or other products to reduce the volume of waste deposited in landfills and subsequent carbon emissions.
A critical challenge in the developing world is endemic poverty and lack of economic opportunities for the population. Studies have shown that projects associated with renewable energy are projected to create more jobs than fossil fuel energy sources. These are in the area of fabrication, sales, installation and maintenance of renewable energy devices. Also, an area of investment is in the development of renewable energy infrastructure like off-grid infrastructure to evacuate energy from source and bypass ageing infrastructure. This may be more applicable in rural areas.
The time to full energy transition is uncertain. Until fossil fuel sources are completely replaced by clean, renewable and sustainable energy sources, the use of fossil fuels as an energy source will likely not end abruptly. Despite the increase in cleaner energy sources, they can hardly keep up with global energy demand, which means fossil fuels will continue to bridge the energy supply gap. At worst, a fossil energy source that burns more efficiently and emits less greenhouse gases may serve as a bridge in the energy transition period. It is worthy of note that fossil fuels interests worldwide are very powerful, due to the huge amount of resources in their arsenal.
This brings us to the issue of gas resources. A report by Gulf Times on 3rd of November 2024 posited that Qatar’s LNG production will rise by 35% in 2027, as additional demands from Europe are expected. This would raise per capital income of the Gulf country in excess of $80,000. Following the Russian-Ukraine War, gas prices surged in 2022, and in the first quarter of 2024, Qatar declared a budget surplus of about USD$550million, with oil and gas contributing significantly to the country’s earnings. Given Nigeria’s gas reserves, the country can do better in increasing the tonnage of gas production to boost our foreign exchange earnings. This would greatly enhance the economic outlook for the Niger Delta and Nigeria.
To tackle coastal erosion in the Niger Delta, robust coastal defence systems are needed. We have a lot to learn from other countries who have such infrastructure, like the Netherlands which have similar infrastructure. There are various sources of international funding that can be assessed to tackle some of these challenges.
One may see it as an internal contradiction that an advocacy for clean energy calls for massive investments in developing our abundant gas resources and infrastructures. The truth about the matter is that Nigeria is indeed a gas nation, with a proven gas reserves of about 210tcf and a paltry 40b barrels of oil reserves.
A critical resource in demand worldwide and useful for the future of sustainable energy is lithium. Lithium is used in rechargeable batteries for mobile phones, laptops, solar power batteries, and electric vehicles. This is apart from the other medical uses. It is attractive due to its cost and storage capacity over long periods of time when compared to conventional energy storage systems. Reports project that lithium demand will rise from 720,000 metric tonnes in 2022 to 3.2 million metric tonnes by 2030. Lithium is currently being mined in Nasarawa, Kogi, Cross Rivers, and Ekiti States, with additional prospects in Oyo and Kwara States in Nigeria.
The Nigerian current policy for lithium mining is that no company shall be allowed to export raw lithium except lithium processing and refining plants are set up in Nigeria towards value addition. While foreign companies are surging for lithium mining in Nigeria, it is important to provide incentives for local companies to participate, and for banks to plough their profits as investable capital into such mining activities. To avoid being at the mercy of others, with the increasing demand for lithium especially by China, Nigeria can reap economic benefits by tapping into the lithium value chain. Other minerals in Nigeria found in commercial quantities that are key in the energy transition discussion include copper (found in Bauchi, Gombe, Kano Kogi, Nasarawa, Niger Oyo, Plateau, and Zamfara States, and FCT Abuja), nickel (found in Kaduna, Kano and Plateau States). Nigeria is also said to host one of the highest reserves of cobalt in the African continent.
In all, Nigeria not only has resources for developing sustainable energy sources, but also has minerals useful for the energy transition game. It is important to collect country-wide data to have an understanding of mineral reserves so that exploratory activities are not left in the hands of foreign entities alone, while the country to benefit the most, lacks the technical know-how on prospects and exploratory methods.
Recommendations
It is time for us to move from ideas to actions. Deliberate policies need to be put in place to promote the development and adoption of renewable and sustainable energy sources for cities and towns that are still far from the energy mix.
Grid expansion is also an area for active investments. Energy produced and not properly evacuated to end-users end up as wasted investments. Efficient Transmission infrastructure is therefore critical in the energy mix.
While the process to climate neutrality is ongoing, countries can maximise their current potentials. For example, a Bloomberg report on Thursday 21st November 2024 highlighted that Kuwait proposed to spend over $33 billion to ramp up oil production capacity, placing a bet on increased demand for decades to come. I would recommend that Nigeria energy chiefs put investments in place or articulate robust policies to attract investors to sweat most of our fallow assets in the Niger Delta, reinvest the generated funds in other sectors of the economy, like technology development in building sustainable cities and towns.
Gas has been said to be an enabler of the energy transition, because it burns more efficiently and reduces emission of greenhouse gases. Nigeria has about 210tcf of proven gas reserves, making the area an attractive energy resource base in the energy transition game. Unproven gas reserves in Nigeria are in excess of 600tcf, making Nigeria a lucrative gas province. Harnessing our gas reserves both in gas powered stations and the export market can viably support us during the energy transition phase.
Incorporation of sustainable energy courses in our school curriculum to enhance the skill-set of the youthful and bulging population. This way, our youth population can be prepared to become renewable energy entrepreneurs, for example, in the area of design and fabrication of renewable energy gadgets, production of feed-stock for biofuels, installation and maintenance of solar panels, and so on.
A potential challenge and an issue we have seen repeatedly in the Niger Delta is coastal flooding. This may hamper the development and utilisation of energy resources. Thus, climate infrastructure projects, like dikes and levees, are urgently needed. This of course would require enormous investments which can be sourced from abroad.
Nigeria already showed the potential for innovation with the emergence of technology-driven businesses as well as research into the use of solar energy. This points to the usefulness that investments in research into renewable energy technologies will foster regional cooperation and development. In the Niger Delta and countrywide, we have the resources, we have the people; we need the investments to transform the people into highly-skilled innovators and to transform the resources towards a sustainable energy future for our people. As we are thinking of 2025 and beyond, what percentage of our national budget is dedicated to climate change action and energy transition?
Government needs to work with international organisations to have access to funding as well as create incentives for investors to tap into our vast renewable and clean energy resources.
Conclusions
In this contribution, I have presented a perspective on the energy transition question with attention to our fledging developing environment. I have highlighted the challenges, threats and opportunities for Nigeria. The abundance of renewable energy resources in the country cannot be overemphasised; especially the proximity to the equator for photovoltaic technology, a more than 853-kilometre coastline for marine energy, access to hot water underground sources for geothermal energy development, biomass and biogas. We have suggested recommendations that can help guide government policies both in taking deliberate action, creating energy security and empowering the population.
Renewable energy finance is also a critical issue. While developing countries cannot go cap-in-hand all of the time to rely on developed countries to finance renewable energy projects, we have made a case for using a transitionary resource resident in Nigeria to get the capital needed for the development of renewable energy resource towards a sustainable and robust energy and economic future.
Haruna Momoh is the former managing director of Petroleum Products Marketing Company Limited (PPMC Ltd).
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