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Energy Transition in a Fossil Fuel Dependent Country — the case of Nigeria

Chiahanam Nwobodo
6 min readNov 16, 2022

1.0 Introduction

Heraclitus, a Greek philosopher, once quoted that “change is the only constant in life.” The global energy sector continues to witness this reality as quick revolutions are redefining the faces of its operations. The demand for a system that encourages environmental sustainability, cost efficiency and overall viability has shifted the mindset of key players in the energy industry from a fossil fuel-driven industry to more environmentally friendly energy sources. Given the relevance of the energy industry to the Nigerian economy, Nigeria cannot afford to be indifferent in these global transformations. This essay will attempt to outline what the energy transition would mean for a fossil-dependent country like Nigeria and develop strategic and pragmatic approaches that will help in steering through the rigours of this fundamental shift into the future for the sake of the planet’s ecosystem.

2.0 Overview

As stated by Adewuyi (2020), sustainable energy transition is broadly regarded as a concept of improving robust, effective and efficient energy sectors in a particular country or region without jeopardizing current and future socio-environmental safety. Fossil fuel extraction in oil-rich nations is a significant contributor to the greenhouse gas emissions powering climatic distortions. As the concerns about climate change go further mainstream, the demand for energy sources with more regard for the environment heightens. The United Nations have proposed that fossil fuel is in serious disagreement with the climate goals for a sustainable environment (CNBC, 2022).

Consequently, countries and investments in the energy sector are now turning to cleaner energies that will facilitate the mitigation of rising global temperatures. According to Yuksel and Kaya (2022), clean energy transitions will target limiting the global temperature towards 1.5 degrees Celsius.

Policymakers and stakeholders in the energy sector are expected to oversee a rapid transition, but the big challenge is ensuring that our energy system is not diminished in the transition. Nigeria is a significant player in the fossil fuel energy industry. The importance of the petroleum industry to the economic situation of Nigeria is very fundamental to its general economic stability. It accounts for roughly 70% of government earnings (Esiedesa, 2022). Experts suggest that energy shortages will happen as we witness transitions. How countries navigate through this shift will depend on how deliberate they are in ensuring pragmatic approaches and proactive planning.

3.0 Challenges hindering a sustainable energy transition in Nigeria

Due to economic, political and regulatory obstacles, tackling the environmental, economic and social impact of climate change through an energy shift has failed to fully materialize. The following are fundamental challenges hindering the progress of a sustainable energy transition in Nigeria.

3.1 Poor implementation of policies

The Nigerian government has already launched its Energy Transition Plan. The plan intends to provide a bold roadmap and pathway towards accomplishing net zero by 2060. And it is estimated that about 410 billion Dollars will be needed to achieve the project (Abdullahi, 2022). But can Nigeria afford this much? Our National debt profile to GDP ratio does not think so. According to Olawoyin (2022), the cost of repaying debt surpassed Nigeria’s revenue in the first quarter of 2022. The Nigerian government, so far, has not shown enough readiness to finance and carefully carry out the Energy Transition Plan.

3.2 Inability to ensure energy efficiency

Additionally, the rapid growth of the Nigerian population continues to mask even the slightest gains in the energy transition initiative. A World Bank Energy Report issued in February 2021 shows that 43% of Nigeria’s population lack access to grid electricity. These situations are mainly because of the government’s inability to place enough attention on essential components of the energy value chain such as energy efficiency.

3.3 Poorly developed cross-sectorial linkages

Another inhibiting factor in the energy transition scheme in Nigeria is the existence of poorly developed cross-sectorial linkages. The development of renewable energy sources has failed to reach an appreciable level because key sectors of the Nigerian economy have been unable to drive the demand for these energy sources. Such key drivers like small and medium enterprises have not featured well in the transition scheme. We have also failed to ensure an integrated rural development. Developing these cross-sectorial interfaces is very crucial to broadening renewable energy opportunities.

Meeting ambiguous sustainability targets requires a bold, whole-of-society approach sustained by long-term government commitment.

4.0 Recommendations

4.1 Energy Transition: the role of energy efficiency

Energy efficiency is a vital component of the transition to a clean and sustainable energy system, and the impact of energy efficiency initiatives can go well beyond energy savings (Nasamu, 2022). Energy demands are increasing in Nigerian society given the exponential growth of the Nigerian population. Hence, we must encourage strategies that will encourage consumers to conserve energy as part of the short to medium-term solutions to the energy availability crisis currently plaguing Nigeria. Smart and efficient electricity usage enabled by consumer behavioural and cultural adjustments will expedite the energy transition to a low-carbon system.

4.2 Diversification

Nigeria must support a broader diversification of wealth to create the needed room for productive and competitive economies that are more adaptable and resilient in the decarbonizing world. Nigeria, whose income depends on a narrow range of assets, such as fossil fuel reserves and emission-intensive industries, needs to build a more balanced portfolio of produced, human and natural capital.

4.3 Climate Cooperation

Diversification and energy efficiency will not be enough to power the energy transition in fossil fuel-dependent countries like Nigeria. To enable efficiency in the transition project, cooperative instruments such as wellhead taxes and preferential trade agreements or wholesale conditional financial and technology transfers must be employed to incentivize and facilitate climate cooperation.

According to Peszko et.al (2020), modelling simulations show that if fuel importers and exporters together apply innovative cooperative strategies, oil and gas-rich countries will have enough revenues to enable a transition to a low-carbon economy without sacrificing living standards. Through this approach, the resources needed to support people negatively affected by this energy shift will also be made available.

4.4 Government should encourage influential local policies

The Nigerian government can adopt the stick-and-carrot approach, which includes “green taxes” on harmful environmental activities and activation of environmental standards and certification for energy execution, emissions and pollutants—including tax rebates for reaching these standards. They should also provide loans and grants for green investments in sustainable agriculture, renewable or low-carbon energy sources, energy-efficient buildings, etc. Subsidies and tax rebates are great tools for boosting the demand for green products.

4.5 Digitization

For the Nigerian energy transition projects, digitization will be very key to making power-generating assets more efficient, the electric grid more resilient and secure, and the aviation industry more sustainable, and it will also aid manufacturers to reduce waste. Digitalization will help to create incentives and make it easier for producers to store and sell surplus electricity to the grid. Decarbonisation requires a balance between legacy systems and emerging technologies and between the environment and business economies.

5.0 Conclusion

To enable an efficient energy transition with minimal disruptions to the overall economic situation of Nigerian society, stakeholders in Nigeria‘s energy sector must wear a more proactive and pragmatic disposition to enable transformational results. We should note that the future is not a random project; we must design it. If we are going to compete in the world ahead, then we must reorder our priorities. The future is coming; we need to be in it!

References

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Chiahanam Nwobodo

Written by Chiahanam Nwobodo

26 Followers

A Researcher. A passionate writer that thinks differently

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