Nigeria's Energy Transition Plan is a pivotal step in responding to the challenges and opportunities of shifting toward cleaner energy systems. NRGI experts share recommendations for consideration by the incoming government on achieving the plan's key priorities.
The government’s Energy Transition Plan (ETP) is a pivotal step in responding to this challenge and opportunity. It comes at a huge cost—$1.9 trillion—and requires major social and economic changes. As citizens vote this weekend, it is essential that they have a better understanding of and a greater say in the country’s energy transition plan—even though none of the major candidates have even referenced the transition plan. This is a grave omission.
The plan prioritizes decarbonizing five sectors—power generation, oil and gas extraction, cooking, industry, and transport—and positions gas as the main fuel for electricity generation. However, it omits details on how to achieve its priorities. It aspires to drive economic growth but does not account for the risk the global energy transition presents for Nigeria’s oil sales and the loss of federal and state government revenues to fund this growth. It seeks to bring electricity to the 43 percent of Nigerian homes in darkness but does not provide a holistic framework for addressing long-standing domestic energy sector finance and infrastructure challenges. It aims to reduce poverty by creating jobs and increasing energy access but does not specify how the technological, financial and human resource gaps will be filled.
Prior to the COP27 climate conference, Victoria Ibezim-Ohaeri from Spaces for Change spoke to NRGI about the need to learn from past lessons.
Mitigate the risk to Nigeria’s dependent economy. As Nigeria’s oil export customers transition their own energy systems and reduce demand for Nigerian oil, Nigeria’s oil-dependent economy and government finances will be increasingly exposed to risk which the energy transition plan does not adequately acknowledge. Nigeria’s next government should map risks to government revenues, employment, foreign exchange, supply chains, and Nigerian National Petroleum Corporation (NNPC) investments.
Prioritize spending that spurs sustainable development beyond oil. Now, Nigeria pays more for oil subsidies than its anticipated earnings from oil. Prioritizing subsidy payments takes scarce resources from other sectors such as agriculture and information technology. Also, the NNPC continues to increase oil investments in what may become stranded assets. Authorities could better serve Nigerians if they built systems to reduce Nigeria’s oil dependency.
Attracting investments to fund the plan. Nigeria must attract investment from donors, financial institutions and philanthropists in order to implement the ETP and diversify the economy beyond oil. The new government should provide incentives that encourage tangible investments in infrastructure, human resources, technology and other areas essential to delivering on the ETP rather than taking on unsustainable debt.
Streamline and clarify policies and plans. The Federal Ministry of Finance, Budget and National Planning should ensure that the plan is properly aligned with existing federal and state plans. This includes the 2021 Nationally Determined Contributions, Decade of Gas Plan, Power Sector Recovery Plan, the National Development Plan, and other iterative plans to ensure that the ETP is implementable, realistic, and adopted by implementing government institutions. This is necessary to clearly demonstrate how the government can achieve its net zero goals and also ensure sustainable economic development.
Resolve environmental legacy issues. As transition minerals such as lithium gain more importance in the global transition, the Federal Ministry of Mines and Steel Development must first address legacy mining issues, including environmental degradation and related social conflict to minimize the impacts before seeking to benefit. The Federal Ministry of Environment must also prioritize environmental remediation in oil-producing communities in preparation for a future beyond oil.
Clarify its plans for gas use. The plan names gas as a transition fuel. The government should clarify what its expectations are for gas use for economic development and domestic gas energy systems. It must map out the infrastructure, finance and system gaps that have foiled previous gas expansion efforts. It must weigh that against the shrinking global fossil fuel investments and increased divestments from potential gas exploration by partner companies and adjust plans accordingly.
Be collaborative, cohesive and realistic. Seamless collaboration and buy-in to the objectives of the plan from government institutions is necessary. Massive investment in gas will be required to drive its use as a transition fuel and reduce spending on oil, as set out in the plan. The recently inaugurated National Council on Climate Change (NCCC) should weigh the objectives of the plan against the policies and actions of critical government institutions, such as the Federal Ministry of Power and Petroleum Resources. These must then be reconciled.
Make the plan inclusive and equitable. NRGI has found that oil-producing communities, women and youth groups appear to be the least consulted and prioritized in the current ETP. Implementing it requires buy-in and active participation. Few Nigerians understand the plan, how it applies to average people, or their role in making it a success. Citizens cannot get behind a plan that they don’t understand—especially if they are to change energy use (from petrol and diesel to power businesses and households, and from kerosene and charcoal for electricity and cooking) to the solar and biogas sources the plan envisions.
Prior to the COP27 climate conference, Tijah Bolton-Akpan from Policy Alert spoke to NRGI about how community voices should help shape the energy transition plans and hold decision-makers accountable.
Strengthen governance of the Energy Transition Plan. So far, the Federal Ministry of Environment and the Energy Transition Office have led on the ETP. The NCCC will soon assume leadership of the plan. To be effective, the council should be constituted in a fair, equitable and representative way that ensures that it retains the gains and institutional knowledge generated so far. The council should adopt policies that focus on transparency in revenue generation and spending of transition funds and use engagement frameworks to inform stakeholders of progress and plans.
While no one can say who will triumph in Nigeria’s elections, it is clear that bold and inclusive leadership on the country’s energy transition must be among their priorities.