Energy transition: AfDB calls for increased power projects funding, job creation

The African Development Bank (AfDB) has said that for Nigeria to achieve a just energy transition, there is a need for increased funding of renewable power projects and investment in green jobs.

In his keynote address at the 3rd Anniversary Lecture of the Hero of Environmental Actions for Development (HEAD) Awards, Director General, Nigeria Country Department, AfDB, Lamin Barrow, said financing the re-skilling necessary to absorb the labour force would also be fundamental.

In his presentation ‘Climate Change and Energy transition in Nigeria’, noted that with less than 1 per cent of renewable energy connected to the national grid, the country needs to promote decarbonization through carbon markets; embed innovative technology to catalyze green growth; scale-up the use of natural gas for transportation and as transitional fuel; scale-up renewable energy technologies; and provide fiscal incentives to promote renewable energy, including smart subsidies, tax holidays, investment grants and import exemptions. 

He said, “In the urban areas, there should be more focus on energy efficiency in both new and existing buildings; designing buildings to utilize more natural lighting to minimize energy consumption; in addition to policy reforms, eco-labelling, and development of a carbon market sending the right signals to investors and consumers.

“Through the Climate Change and Green Growth Framework Policy (2021-2030) and the Nigeria Country Strategy Paper (2020-2024) the African Development Bank is supporting the Federal Government’s Nigeria’s efforts to diversify the Nigerian economy and rollout of low-carbon technologies, including solar clean cooking solutions, energy efficient technologies, as well as gas monetization and reduction in gas flaring.”

Dr. Barrow said it has become obvious that climate change was taking a great toll on the Nigerians economy with impacts in declining agricultural production and productivity, in water supplies, and in the coastal areas.

For instance, Nigeria’s total GHG net national emissions, was estimated at 712,638 Giga grams of CO2-equivalent in 2015, with agriculture, forestry, and other land uses being the major contributors (about 70%), followed by energy at about 28 per cent. 

“We feel the rising temperatures, extreme heatwaves, and experience more frequent droughts and floods. Nigeria’s topography and location, being at the confluence of two major rivers (the Niger and Benue) make it susceptible to flooding. Climate change therefore poses a serious threat to Nigeria’s energy system and industrial competitiveness.

“You will recall the devastating floods of 2012 and 2022, two of the country’s worst flooding events leading to loss of many lives with millions of people displaced. The damage to infrastructure and farmlands ran to billions of Naira.

“UNICEF reported that the 2022 floods severely impacted 34 states, affected 3.4 million people, displaced 1.4 million and caused 612 deaths. In its 2021 report on Greening Industrialization, the United Nations Economic Commission for Africa (UNECA), recommended the construction of flood-proof infrastructure and adoption of flood management and prediction tools. 

Part of efforts by the Federal Government to tackle climate challenges is the pledge to help limit global warming to 1.5 degrees Celsius above pre-industrial levels under the Paris Agreement. 

“Through its NDC, Nigeria has committed to i) end gas flaring, thereby achieving 60% reduction in fugitive methane (CH4) emission by 2030; generate 13GW of renewable energy through Solar Home Systems, street lights, mini-grids and own-generation; target 7.3 million households using improved cooking stoves by 2030; attain 2.5% annual improvements in energy efficiency to reach 30% by 2030; 25% of trucks and buses using CNG by 2030; improve grid transmission and distribution losses by 8%; and; apply circular economy approaches to achieve a recycling rate of at least 7.47% by 2030. 

“The updated NDC signals Nigeria’s commitment to aligning financing flows with the Paris Agreement, consistent with the National Climate Adaptation Plan and Nigeria’s Low-Energy – Long-Term Strategy (LE-LTS). This updated NDC also highlights Nigeria’s commitment to reduce methane emissions by 60% and achieving a net-zero target as early as 2050,” he said.

The AfDB Nigeria Country Director while noting that Nigeria can tap into new and emerging renewable energy technologies such as Green Hydrogen to boost its energy sector if investments in the range of $680 billion to $1.3 trillion is carried out.

“That is why the Bank is supporting the $ 200 million Nigeria Electrification Project (NEP), which seeks to expand access to electricity for the unserved and underserved segments of the population. NEP entails construction of 150 Mini grids to electrify more than 500,000 households in Nigeria through provision of over $45 Million in grants to incentive developers to provide services targeted to beneficiaries located in the rural areas. To enhance affordability, NEP is also providing a $20 Million grant to promote the Productive Use of energy component with a view to stimulate the rural economy through use of the electricity from the mini grids for productive activities.

“That is why the Bank’s operations are systematically screened for climate risks and green growth opportunities, to ensure that climate adaptation and mitigation measures are mainstreamed in projects.

“For instance, in 2023, all Bank approved projects in Nigeria were screened for climate risks while climate adaptation and mitigation measures were mainstreamed in these projects. Also, the proportion of the Bank’s lending allocated to climate finance in Nigeria increased to 33% in 2023, an 8% improvement from 2022,” Barrow said.