Global economic crisis: Is Nigeria ready for renewable energy transition?




…Osinbajo advises a more equitable transition

…Gas, our own renewable energy – Sylva

‘…Stakeholders’ collaboration needed’

… Nigeria ready, but…- Expert

The world is moving from fossil fuel to renewable energy, but many have been left wondering whether or not Nigeria, with its dependence on oil as a major source of revenue, is ready for this global shift. BENJAMIN UMUTEME writes.

In 1957, when Nigeria discovered oil in Oloibiri, in the present day Bayelsa state, most people thought the country was set to become a global super player, but it was not to be. Rather, the country’s economy has continued to struggle especially with the volatility of the oil market in recent times.

With the discovery of oil, Nigeria left its other sources of revenue without a look into the future. While the country made so much money from the sale of crude oil, it failed miserably to invest the money in critical sectors of the economy and, by extension, the oil sector, thereby stalling investments in the industry.

And then the coronavirus pandemic hit the world economy making Nigeria’s inability to make hay while the sun was shining obvious. By April last year, oil prices had entered negative territory and with it the need for the global economy began to look at cleaner and cheaper sources of energy to power production.

Energy transition/issues

Many say the next transformation in human civilisation now occurs in the energy sector. Already, the transition has started disrupting oil exporting economies like Nigeria that depend heavily on oil for its economic activities.

Environmental issues are one of the major problems facing humans today. Emissions from energy use, resource depletion and waste generation from production and consumption activities and many other anthropogenic activities impacts the globe adversely, consequently, the growing attention on energy transition and circular economy.

Fossil fuel has played a critical role in socio-economic development and international relations of countries over the last 120 years. However, climate change and air pollution have increased the inevitability to consider the use of fossil fuels. The major problem with fossil fuel use is greenhouse gas (GHGs) emissions.

The GHGs—N2O, carbon dioxide (CO2) and methane (CH4) have increased by 20 per cent, 40 per cent, and 150 per cent above pre-industrial level. In the 1880s, during the industrial revolution, the atmospheric concentration of CO2 was about 280 parts per million (ppm).

In 2015 and 2016, it was 399 and 403.9 ppm, respectively, representing a 30 per cent increase above pre-industrial level. Emissions from combustion of fossil fuel account for 65 per cent of the global anthropogenic CO2 emissions. Residence time of CO2 in the atmosphere varies between 50 to 200 years. About two-thirds of global GHGs emissions come from energy production and consumption. Between 1880 and 2012, the average temperature of the globe increased by 0.85 ℃.

Presently, there are increased variations in temperatures and severe weather, resulting in increased degrees and incidences of hot days across most regions of the globe; thus, the present emphasis on renewable energy.

Actions that support sustainable development and advancement throughout all segments of the human environment are critical to human civilisation. Transition from “hydrocarbon molecules to electrons” (fossil fuels to renewable and low-carbon energy) is growing globally.

As it stands, renewable energy technologies are becoming more cost-competitive relative to fossil fuels. The increasing transition will have serious socio-economic and political implications if the country does not diversify its economy. For instance, the contraction in oil export because of global transition to renewable energy will reduce the government’s revenue, increase unemployment, decrease capacity to finance infrastructure and development projects, and increase poverty rate.

Nigeria has enormous renewable energy potential, solar, wind, biomass, among others. The use of renewable will improve environmental quality including increased use of biomass (organic wastes) for energy production which would advance Nigeria solid waste management system and vice versa. All these are associated with sustainable resource management.

Total’s initiative, others’ strategies

In a bid to drive home the reality of the transition to cleaner source of energy, oil major Total Exploration re-branded to Total Energies. This, the company said, signals its new strategy of diversification towards cleaner energy sources.

“The group is expressing its intention to transform itself into a multi-energy company to respond to the twin challenges faced by energy transitions: more energy and fewer emissions,” Total’s chief executive Patrick Pouyanne said in a statement.

This year, Total plans to devote more than 20 per cent of its investment budget to renewable energy sources as well as electricity. But environmental activists say it must do more to fight climate change, and recently the International Energy Agency said all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050.

Similarly, several international oil firms are already realigning their operations and reducing investments in upstream activities with a view to embracing cleaner fuels. Even European Banks are becoming reluctant to support new investments in fossil fuels.

Countries, even the least expected to comply, are making commitments to a carbon-free world.

China has pledged to become carbon neutral by 2060, India has committed to a target of achieving 40 per cent of its total electricity generation from non-fossil fuel sources by 2030, the UK sees the country carbon neutral by 2050 and for the first time, in 2020, renewable overtook fossil fuels as the European Union’s main source of electricity.

The president, Nigerian Gas Producers, Ed Ubong, noted that gas will continue to play a key role as green fuel as we try to meet the renewable target as the country try to meet its sustainable energy demand.

He said, “Nigeria is sitting on a huge reserve of gas. We must utilise the gas we have. We must unlock the challenge that exists in the gas to power value chain and improve power to energy for the over 85 million Nigerians. We must address structural issues around the grid.

“How do we reduce distribution losses, how do we ensure that payment happens, how do we ensure that gas plants get gas reliably.” Here-in is the dilemma for Nigeria and most emerging economies that still rely heavily on ‘dirty fuel.’

Osinbajo’s admonition

However, in what looks like a plea to the European Union, Vice President Yemi Osinbajo has urged developed countries to adopt a more equitable energy transition for the developing world. According to the vice-president, they ought to recognise the significant differences between different fuels and the context of their use.

He is of the view that there should be a gradual adoption and implementation of the transitioning scheme for fossil fuels, especially for Africa’s developing economies with huge energy access gaps.

“The path to de-carbonisation by 2050 needs to solve energy poverty by 2030, or that demand will be met through dirty energy sources,” he said.

FG’s regrets

The Minister of State for Petroleum Resources, Timipre Sylva, regrets that Nigeria does not have the resources to go into renewable at the moment. He, however, does believe that for Nigeria, gas is a bridge to achieving its own renewable energy.

Speaking with Blueprint Weekend recently in Abuja, Sylva said while the world is moving towards clean energy, Nigeria would be transiting to gas, which it considers as its own clean energy.

“So, should we also join them now to move to renewable energy and abandon our resources? I don’t think so, and I say it boldly everywhere. After all, those economies were built on resources from coal and other dirtier fuels,” he said.

The minister was rather confident that with the county’s abundant gas resources Nigeria would gradually transit to renewable. According to him, the country does not have the huge funds needed to go into clean energy research.

“Okay, today, they have moved to this level. In a situation where 600 million Africans are still without energy, I don’t think it’s a realistic position. That’s why in Nigeria, our focus now is on gas which we consider at best a destination fuel and at worst a transition fuel to renewable.

“And since we have it in abundance why don’t we maximise it now so that at least we are taking a step forward as well. That’s our position in Nigeria, not necessarily that we want to go into developing renewable. In energy usually, there must be a mix. You are not expected to use only one source of energy. Our focus now is on gas as a major source of energy which we have in abundance.

“The global energy industry is moving towards renewable even the investors are taking out investable funds from the oil and gas sector and moving into renewable. Is Nigeria also joining that race?

“It is something that is difficult to say. We are not in that race as such. There’s a lot of funding required for research for renewable and we are not into that yet. But for Nigeria, we are looking at gas as a transition fuel to renewable.”

He said further: “Some people are even looking at gas not as a transition fuel, but as renewable. If you have gas you can consider it to be renewable fuel as well. The question I always ask when I go for international events is: if the concern with non renewable is carbon emission, why is the global economies are now focusing on developing carbon capture technologies instead of moving away from the non renewable?

“If the global economy is focused on carbon capture, we can actually clean up the fuel as well and reduce the emission from non renewable, clean it and it becomes something that will not affect climate change. But the global system tends to be moving away from the oil and gas non renewable resources which we have in abundance.

“In energy usually, there must be a mix. You are not expected to use only one source of energy. Our focus now is on gas as a major source of energy which we have in abundance.”

A gradual process?

On his part, the maintenance/project manager, Servon Nigeria Limited, Anderson Aleru, told this reporter that Nigeria was ready for the energy transition.

“It is going to be a gradual process; natural resources like gas are something we have in sufficient quantities and the federal government wants to really start producing gas so that we can also convert it to supply electricity.

“It will take time because to be able to build a central processing facility for this gas is very expensive. It’s going to be a gradual process since funds will be involved,” he said.

Stakeholders’ role

Speaking to Blueprint Weekend on the sidelines of the Nigeria International Petroleum Summit (NIPS), the general manager, Sales of Global Process and Pipeline Limited (GPSS), Taiwo Abiodun, said energy transition can only be possible if all hands are on deck.

According to him, with its abundant gas resources, Nigeria can use gas as a transition to clean energy.

He said, “Presently, Nigeria is generating a certain percentage of gas but you can also see that with what is happening, what we are suffering with insecurity, what we are suffering about all the issues that affect crude and all that, the future is basically inherent in gas production. And how can that happen?

“You will also agree with me that a lot of Nigerian companies have been given license to do a whole lot of local refineries just to support what the national companies are also doing. Why, because renewable energy is the future of the world globally. Everybody needs gas! Gas is life now! For us to even have light here, we need gas.

“So, we need to pull our forces together to make sure that there is a high-level of improved production of hydrocarbons in Nigeria through our collaboration working with the right stakeholders and make sure that we deliver what we can do.

“We have the resources, we have the technology, and we have the capability in Nigeria. What is lacking is that collaboration. If everybody, all IOCs, all technical persons came together to say ‘hey, let us give it a try, let us take it over,’ in the next 10 years, there will be less of crude and there is going to be more of gas because everywhere the talk is about renewable.

“Just last week, Total Exploration Nigeria changed to Total Energies. Now, Total is already thinking of a 10-20 years plan into renewable energy. What do you need to drive renewable energy? You need gas; you need hydrocarbons to drive it. And that is probably going to be the future everybody wants to hear.”

PIB?

In his view, an economist, Friday Efih, said a quick passage of the Petroleum Industry Bill (PIB) will quicken the energy transition for the country.

According to the expert, the inability of the legislature to pass the PIB for the past 12 years is a drawback to investments in the oil and gas industry.

“As it stands now, one cannot out rightly say Nigeria is ready for energy transition especially with the kind of money involved in changing to renewable,” he said.

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