With the world gradually jettisoning fossil fuel and turning to green energy, Nigeria has been putting its acts together in order not to be caught napping. In this piece, BENJAMIN UMUTEME takes a look at what the country is doing in its bid to transit from fossil fuel.
When Nigeria joined 196 countries globally on December 12, 2015, to be a signatory to the Paris Agreement on climate change, it was meant to signal the beginning of a gradual shift from fossil fuel use to alternative/green energy.
The plan which entered into force November 4, 2016, aimed to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.
To achieve this long-term temperature goal, countries aim to reach global peaking of greenhouse gas emissions as soon as possible to achieve a climate neutral world by mid-century. As a signatory to the agreement, Nigeria has not relented in pushing to ensure that the target of 2030 zero emission is achieved.
All over the world, many financial institutions have stopped the funding of new oil projects. While leading International Oil Companies (IOCs) are now shifting focus to green energy, all in a bid meet the 2030 target.
The agreement coming into force has already sparked low-carbon solutions and new markets. As more and more countries, regions, cities and companies are establishing carbon neutrality targets; zero-carbon solutions are becoming competitive across economic sectors representing 25% of emissions. By 2030, zero-carbon solutions could be competitive in sectors representing over 70 per cent of global emissions.
Defending fossil fuel
As it stands at the moment, funding for oil and gas projects have started to thin out as countries take the next step to drastically cut global carbon emissions that continue to threaten human existence.
According to reports, the level of support by the world’s biggest 60 banks climbed to $3.8 trillion of financing for fossil fuel companies, with levels in 2020 higher than in 2016.
And to underscore the importance of global climate action, Goldman Sachs, HSBC, BNP Paribas and 24 other global banks are coming under increasing pressure from a coalition of large investors to stop financing carbon-intensive projects and to scale up their green lending.
The group of 35 big investors managing $11 trillion in assets, which include Amundi, Legal and General Investment Management, the Church Commissioners for England and Nordea Asset Management, has called on the banks to align their financing with a goal of net zero emissions and to ensure that executive pay is linked to this target.
The move is the latest sign that investors’ climate focus is shifting from big carbon emitters, such as oil and gas groups, to those providing the finance for carbon-intensive projects.
Even the European Bank for Reconstruction and Development (EBRD) believes that it will stop investing in upstream oil and gas projects as part of plans to align its activities with the goals of the Paris Agreement on climate change by the end of 2022.
EBRD’s managing director, Harry Boyd-Carpenter, told Reuters that the bank was ceasing investment in oil and gas exploration and production.
“We will no longer invest in upstream oil and gas projects. However, we will continue to finance select projects in the midstream and downstream sectors but only where those projects are aligned with, and significantly contribute to, the goals of the Paris Agreement,” he said.
Danger to developing countries
Among the most developing economies, defunding oil and gas projects would really hurt them as the majority still largely depends on revenue from such commodities to survive.
Take Nigeria, for instance, officials data put revenue from oil sale to be around 90 per cent of the country’s total revenue.
In the light of this, Vice President Yemi Osinbajo noted thatplans to defund gas projects in the run up to the global net-zero emissions target will be unhelpful to developing countries such as Nigeria.
Speaking at a high-level UN event on the energy transition plan in Africa with special focus on Nigeria ahead of the UN Climate Change Conference (COP26) summit, Osinbajo cautioned that “limiting the development of gas projects, posed dire challenges.”
According to the vice-president, energy demands in Nigeria and across Africa “are set to rise, as indeed it must, to deliver the industrialisation, jobs and economy-wide progress people deserve.”
Speaking during a virtual ministerial event on energy, hosted by the United Nations, the Minister of Environment, Mohammad Mahmood Abubakar, was even more explicit when he warned that the international push to stop funding for gas projects in sub-Saharan Africa “is threatening the region’s ability to de-carbonise in a fair way.”
Abubakar noted that several wealthier nations have gas as a major pillar in their multi-decade de-carbonisation.
He said: “However, many are now limiting financing to gas projects for domestic use in sub-Saharan Africa, a region responsible for 0.55% of global carbon emission that still needs to industrialize and grow,” he said. “The defunding of gas projects by most financing organizations is a threat to achieving a global energy transition that is equitable, inclusive, and just, leaving no one behind.”
Nigeria’s efforts
In the face of the defunding of oil and gas proposition, Nigeria with its abundance of oil and gas reserves has said while it agrees with the global energy transition plan, it is, however, not comfortable with talk of defunding of gas projects.
Delivering his keynote address at the Seplat Energy Summit in Abuja recently, the Minister of State for Petroleum Resources, Timipre Sylva, said “Nigeria needs the money from oil to develop its gas sector.” According to him, Nigeria still considers gas as its own transition fuel as it is much cleaner than fossil fuel.
Sylva, who continues to champion ‘The Decade of Gas’ programme, noted that Nigeria will continue to explore and invest in the development of hydrocarbon resources while pushing for the use of gas as transition fuel.
He said: “While acknowledging our commitments to net-zero as a nation, there is no gainsaying the fact that Nigeria requires fossil fuel as its base load energy source. This is undoubtedly a major concern for climate activists in developed nations, but the clamour to emphasise only renewable energy as the sole pathway to energy transition is a source of concern for African countries that are still working to achieve base load industrialisation, address energy poverty and ensure reliable power supply.
“Multiple pathways to the energy transition should and must exist in order to ensure that no country is left behind in the process of achieving net-zero by 2050.
Part of the efforts to get full value for its huge gas reserves is the Nigeria Gas Flare Commercialisation Programme (NGFCP), which is geared towards eliminating gas flaring through technically and commercially sustainable gas utilisation projects.
There is also the National Gas Expansion Programme, which will see fuel-powered cars being converted from petrol to gas. The aim of this is to deepen domestic usage of natural gas in its various forms.
For Sylva, with the world moving away from fossil fuel, it was time for Nigeria to grow its huge gas reserves.
“The global oil industry is moving more towards gas and Nigeria is more of a gas country than oil, because we have 203 trillion cubic feet (tcf) of gas reserves that have been discovered. All the reserves we have today have been found not while looking directly for oil but while looking for gas. They were almost accidental finds–all of them. So, if we target gas exploration directly by exploring for gas, the expectation is that we can even increase our gas reserves up to 600tcf, which will put us among leading gas nations in the world. We felt that, look, let us move the country forward in that sector and I believe that we’ve gained a lot of funds and people are more aware of the need for us to move towards gas.”
