Fossil Fuels To Cleaner Energy Mix: Challenges And Opportunities For Nigeria

 

Access to energy has been associated with industrialization 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.

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.

Over 80% 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% of coal deposits, 50% of oil reserves and 40% 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%, and we are not as industrialized as the countries responsible for contributing significantly to carbon emissions? Well, our Lake Chad has lost 90% 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 November 13th 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 recognize 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 industrialized 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.

On Tuesday March 19th, 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.

The installation of 10 megawatts solar power plant in Kumbotso Local Government Area of Kano State, handled by the Nigeria Sovereign Investment Authority (Photo credit: Nigeria Sovereign Investment Authority).

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.

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