Mrs. Sharon Ikeazor, Minister of State for Environment, receiving her plaque at the 19 Aret Adams Memorial Lecture in Lagos.
Global Energy Transition Agenda: Nigeria’s Preparedness?
-By Sharon Ikeazor
It is my pleasure to be here with you all today at the 19th Annual Aret Adams Memorial Lecture 2022 and to be invited to give keynote remarks on the theme: “Global Energy Transition Agenda: Nigeria’s Preparedness?”.
Let me start by saying that as the Minister of State for the Environment, I am delighted that the Board of Trustees of the Aret Adam Foundation deemed it necessary to focus on Global Energy Transition in this year’s memorial lecture. It is a clear sign that the Board of Trustees is cognizant of the global effort to address climate change, and the centrality of global energy transition in this effort to manage anthropogenic climate change.
The year 2021 was a pivotal year for renewed ambition and commitment on the global energy transition agenda. The UN hosted for the first time in 40 years a High-Level Dialogue focused on Energy during the UN General Assembly. This was followed by the 26th Annual Climate Change Conference, also known as COP26, held in Glasgow, with the global energy transition – a just and equitable energy transition – being firmly placed at the centre of discussions for the first time.
At COP26, stakeholders spoke about the political will needed to spur action. I believe that Nigeria exemplifies this with the Government’s net-zero by 2060 commitment announced at COP26 and with this bold and ambitious commitment spearheaded by the highest levels of government, led by H.E. President Muhammadu Buhari, and including H.E. Vice President Yemi Osinbajo, and myself, in my role as Global Theme Champion for the Energy Transition at the UN High-Level Dialogue on Energy. In addition to joining about 137 countries to make a net-zero emissions commitment Nigeria also undertook two other major pledges at the COP26. Nigeria is one of the over 100 countries that pledged to reduce global methane emissions by at least 30 percent from 2020 levels by 2030. Nigeria is also amongst the 141 countries that signed the Glasgow Leaders’ Declaration on Forests and Land Use pledging to conserve and restore forests over the next decade.
It is evident that in the past few years Nigeria has risen to become a global leader in championing and shaping the energy and climate agendas on behalf of developing nations. Nigeria is clear on the need for developing countries to have an effective voice in the global climate change and energy debate.
We are aware of the country’s vulnerability to climate change and the huge social, economic, security costs associated with impacts of global warming. We are aware that, as an oil dependent nation, our economic and developmental aspirations will be compromised if we do not engage with the global energy transition discussion in meaningful ways that allow us to define our transition pathways to align with our broader developmental aspirations. For example, we are mindful of the fact that while we need to join the rest of the world in taking radical action on climate change, we also need to address the significant energy access deficits to avoid further exacerbating global inequalities and leaving millions of people further behind. This is precisely why we made sure that our net zero pledge in Glasgow was backed by a robust Energy Transition Plan which provides a clear pathway for how Nigeria can meet its energy need while also decarbonizing her economy and demonstrating leadership in tackling climate change.
In leading our country’s energy transition efforts that Nigeria is determined to meet the significant challenges but also exploit the opportunities associated with the current global energy transition agenda. The bold and ambitious commitments we made in 2021 will be followed up with an aggressive programme that will leverage catalytic partnerships, frameworks, and policies to attract investment at scale and drive the realization of our energy transition goals.
Already the government has taken one of the most significant steps to advance the energy transition agenda by signing the Climate Change Bill into Law to establish the Nigerian Climate Change Act. The Climate Change Act provides a vital legal framework for achieving low greenhouse gas (GHG) emissions, inclusive of green growth in tandem with sustainable economic growth of Nigeria. The Act is designed to facilitate the coordination of climate change action across ministries and the mainstreaming of climate change actions in line with national development priorities. It is intended to help facilitate the mobilization of finance, and other resources necessary to ensure effective action on climate change. The Act establishes a National Council on Climate Change (NCCC) to be chaired by Mr. President and will have Ministers, CBN Governor, Chairman Governors Forum and President of ALGON to represent the sub National as members.The Act has numerous provisions for private sector participation in governing climate change and energy transition in the country including various market-based mechanism such as carbon trading and private sector investment in nature-based solutions to climate change as one of the country’s greatest means for balancing emissions is the provision of carbon sinks and biodiversity preservation.
In no distant future we will commence the implementation of the Act with the inauguration of the National Council on Climate Change.
Nigeria is taking these bold actions in the midst of a global pandemic with decreasing aid and unstable markets. So we are aware that the task ahead will not be easy. This makes our discussion today on assessing Nigeria’s readiness even more important, as we have publicly declared our ambitious targets. At the High-Level Dialogue on Energy, Nigeria announced an ambitious Energy Compact which highlighted some of our immediate priorities to accelerate the clean energy transition, including the Federal Government’s flagship programme called the Solar Naija Programme. This programme aims to electrify 25 million people across 5 million homes by 2023, while creating 250,000 jobs in the process.
Through the COP26 process, an Energy Transition Council was established under the UK Government’s COP Presidency and Nigeria was selected as a priority country to support amongst other countries across Africa and Asia. A key outcome of this support was the development of Nigeria’s energy transition plan, which was the first of its kind on the continent. Based on data and evidence, the plan laid out a clear pathway for Nigeria to achieve universal access to clean energy by 2030 and carbon neutrality by 2060, highlighting the scale of effort required. Today, we will be discussing Nigeria’s preparedness for driving this clean energy transition, so I will share some of the key insights from the energy transition plan that will hopefully feed into today’s discussion.
The starting point for the development of Nigeria’s energy transition plan was understanding the sources of emissions today. The energy transition plan focused on energy consumption and industrial processes from select sectors including transport, industry, oil and gas, power, commerce, and residential uses. Together, these accounted for 65% of all emissions in 2020. I am aware that the agriculture sector, which has the majority of the emissions coming from livestock and soils degradation was not included in the Energy Transition Plan, but this sector is covered in the revised Nationally Determined Contribution (NDC) where a raft of measures has been identified to decrease emission and make our agriculture sector more climate friendly. We are also in the process of preparing a Long-Term Low Emission Development Strategy and a National Deep Decarbonization Plan. These strategies will cover the agricultural sector in detail. They will complement the Energy Transition Plan and provide policy recommendation that will help to guide the national transition towards the green economy.
One interesting fact to note is that beyond agricultural emissions from livestock and soils, the biggest contributors to emissions in Nigeria today are vehicular transportation, use of firewood, kerosene and charcoal for cooking, and the use of generator sets in homes and for commercial and industrial activities. This highlights the importance of moving away from the use of generator sets which are prevalent across the country and the need to rapidly deploy clean cooking solutions. Nigeria also needs to begin to accelerate the transition towards cleaner electric vehicles in order to curb emissions.
The baseline assessment showed that diesel generators account for approximately 80% of total electricity generation capacity in Nigeria, with natural gas and hydro accounting for the remaining 16% and 4% respectively while solar and wind account for less than 1%. In industry, cement production was identified as the highest emitting industrial sector, and in residences, firewood was identified as the main fuel used for cooking, especially in rural areas where it accounted for 81% of all cooking stoves.
After analyzing the baseline, the working team then assessed what it would take for Nigeria to achieve universal access to energy by 2030, in line with the trajectory required to achieve net-zero by 2060, while also generating enough power to drive industrialization and economic activity. This led to a series of pathways being defined across buildings, industry, oil and gas, power and transportation.
Energy consumption within buildings represent 40% of total emissions in Nigeria due to the use of high emitting cook stoves and the use of diesel generators. As such, decarbonizing buildings will require a transition to biogas and efficient firewood in rural areas and a focus on deep electrification in urban areas. It will also require a transition from generators to renewable energy sources, such as solar technologies, and in particular decentralized renewables to reach enterprises beyond the grid.
In industry, carbon emissions are largely from cement production. This process can be decarbonized by substituting up to 50% of clinker with calcined clay as this does not have a negative impact on performance. Other industry solutions include shifting to zero emission heating solutions such as heat pumps, solar boilers and electric boilers to achieve complete decarbonization in the heating industry, reducing emissions in ammonia production through a combination of green and blue hydrogen, and applying bioenergy carbon capture and storage to cement production.
Oil and gas production accounted for 11% of total greenhouse gas emissions in 2020, primarily from flaring and fuel used during production. Emissions from oil and gas is expected to fall as global demand for oil falls in line with the energy transition over time, however residual emissions still need to be looked at. These can be abated using levers such as bringing an end to flaring and improving electrification and energy efficiency in the upstream activities. Whereas refining activities are expected to increase in the medium term, emissions can be abated through carbon capture and storage.
The Power sector, separate from power provided by diesel generators, only accounted for 9% of emissions, primarily due to gas combustion. However, scaling up the power sector is critical for the full electrification of the economy that is required to achieve the clean energy transition in Nigeria. This will include both expanding grid capacity while maximizing the renewable energy share in the centralized energy mix and deploying decentralized renewable sources at scale.
Nigeria’s energy transition requires a solar-driven capacity increase at an unprecedented scale, amounting to over 5GW of additional capacity per year for 40 years until 2060. While this figure is staggering compared to anything that has been achieved anywhere in the world, it also highlights the important role of gas in creating the grid base load stability required to integrate renewables at scale.
Finally, the Transport sector was another major contributor to emissions, accounting for 24% of total greenhouse gas emissions in 2020 primarily from gasoline in passenger cars. Transport emissions are projected to double by 2050 due to population growth, highlighting the need to begin to fully decarbonize the sector by switching to low-emissions transport technologies such as electric vehicles. However, this is largely dependent on a power sector and infrastructure robust enough to accommodate this massive transition.
Biofuels can be seen as an interim solution as we transition from oil to electric fuelled vehicles, however the volume of bioliquids required could be significant, requiring an increase of bioliquids production and availability domestically.
Whereas the solutions required across the multiple sectoral pathways are now clearer, several challenges remain, such as scale of the capex financing required for infrastructure buildout, resource availability and affordability, as well as addressing cultural habits and lack of awareness. Let me stress again that while these transitions pose challenges for the private sector, they also represent opportunities as government regulations and technological innovations create new markets in renewable energy, climate-smart agriculture, green buildings, carbon-efficient transportation, and other infrastructure.
An often overlooked challenge is what the transition means for a country that largely depends on oil and gas for its revenue and for job creation. A significant share of jobs in the oil industry will be at risk. On the other hand Nigeria’s Energy Transition Plan has a significant potential to create new jobs including up to 170 thousand jobs in off-grid solar deployment in the power sector and up to 200 thousand jobs across the supply chain for clean cooking solutions. Net jobs creation can be up to 840 thousand jobs with the boost of electric vehicles and off-grid solar.
Financing this clean energy transition will require investments of up to $410 billion above business as usual spend. This breaks down to $162 billion net spend on generation capacity, $135 billion on transmission and distribution infrastructure, $79 billion on buildings, $21 billion on industry and $12 billion on transport.
The biggest capex investments are in power and infrastructure, including transmission and distribution, which are the cornerstone of an electrified economy, supporting emissions reduction in Transport and Industry. Power costs will be driven by solar PV, storage and the incorporation of hydrogen.
In making the commitment to net zero by 2060 at COP26 President Muhammadu Buhari made it clear that natural gas has a role to play in Nigeria’s energy transition. With proven gas deposits of 206.53 trillion cubic feet, Nigeria has the largest natural gas reserves in Africa. One key feature of the Energy Transition Plan (The Net Zero 2060 pathway) is a clear and important role for gas through to 2030 consistent with Nigeria’s Decade of Gas.
But to rely on gas as energy transition fuel requires infrastructure procurements and investments. This means that Nigeria requires significant funds to build infrastructure for generating, transmitting, and distributing energy to reduce over reliance on fossil fuels.
Although renewable energy costs have fallen dramatically in the past several years, however, renewable energy projects are not built at a rate that is commensurate to cut down greenhouse gas emissions in line with the Paris Agreement, especially in developing countries where the cost of financing projects can be many times more expensive than in the developed countries. As one of the goals of COP26 involves financing, Nigeria would be able to attract funds provided to developing countries for investments in renewable energy.
In the energy production and manufacturing sectors, realising our net-zero target would be reliant on carbon capture and storage (CCS) as a technology for mitigating the effect of anthropogenic greenhouse gas emissions. This is because achieving CCS is critical to the success of other key elements in the decarbonisation system. Of all the sedimentary basins in Nigeria, the Niger Delta basin is potentially the most suitable for geological carbon dioxide storage due to to the availability of depleted oil and gas fields. While oil exploration and production in the Niger Delta has caused the emission of significant amounts of greenhouse gas in the atmosphere, perhaps government would have more stringent measures in place so that operators in the industry can deploy decarbonisation technologies like CCS. The International Finance Corporation and the World Bank is in talks with Government to develop a domestic market for carbon capture, utilization and storage for industrial emissions and this would help accelerate our energy transition.
As part of our efforts to conserve and restore forests, we are taking positive steps in preserving forested areas under the UN-backed Reducing Emissions from Deforestation and Forest Degradation (REDD+) system. Thankfully, the Nigerian Climate Change Act provides for the establishment of the REDD+ registry as part of nature-based solutions to climate change.
With the REDD+ strategy in place, not only would our rainforests be worth more alive than dead, but collectively, we would overcome the financial incentives to destroy and damage forests for timber, livestock grazing and agriculture. This is in addition to measuring and pricing the carbon captured and stored in our forests using the best method for preserving this critical resource.
2021 was the year of raised ambitions, where the Nigerian Government declared our 2060 net-zero target and many other countries made their own energy transition commitments. With eight years to go until the deadline for achieving the energy access Sustainable Development Goal 7, and with 2060 fast approaching, it is imperative that we accelerate action on ground with catalytic partnerships, frameworks, policies, and regulations needed to crowd-in investments at scale. (And these we have done with the development of our Climate change Act, Energy Transition Plan, 2050 Pathway, Nigeria Energy Calculator (a tool for generating evidence to support intelligent policy making around energy and climate)
This Keynote Remarks was presented by Sharon Ikeazor, Minister of State for Federal Ministry of Environment at the 19th Annual Aret Adams Memorial Lecture 2022
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