Despite receiving accolades from the international Climate Change community for removing subsidies, there is still uncertainty about whether Nigeria’s intention behind this move was truly driven by a commitment to divest from fossil fuels. It is undeniable that Nigeria’s Presidential Compressed Natural Gas Initiative (PCNGI), which strives to enhance the use of CNG-powered vehicles within the country’s transportation system, holds great potential in curbing Greenhouse gas emissions. This initiative will significantly contribute to Nigeria’s journey towards achieving Net Zero Emissions and aligning with global decarbonization efforts.
To adequately align the fuel subsidy removal endeavour with Nigeria’s climate objectives, a multitude of additional measures need to be implemented. As part of this approach to pave the way for Nigeria’s Sustainable Development in line with international standards, it is imperative to allocate a predetermined proportion of the savings obtained from subsidy removal towards a dedicated funding reserve. This specialized fund should then be utilized to support investments and initiatives in climate adaptation, renewable energy, and innovative climate-friendly endeavours.
Solar energy represents 0.2% of its installed capacity.
It is suggested that at least 20% of the savings garnered through the subsidy elimination be specifically allocated towards climate-focused Infrastructure and investments. The Climate Change Fund, created under the Climate Change Act, can serve as a repository for these funds. Accordingly, these resources can be distributed as grants, subsidies, and allowances for various projects encompassing renewable energy, climate-smart agriculture, infrastructure development, and more. International public and Private Sector sources can tap into a portion of the funds to develop substantial investments in renewable energy, thereby utilizing them as catalysts for greater financial contributions.
Based on the estimated savings, this will create an opportunity to unlock around ₦16 billion each year, dedicated to nurturing Nigeria’s sustainable development through climate finance. The participants in the global climate accord during COP28 in Dubai, attended by the president and several ministers, pledged to join forces in order to triple the global capacity of Renewable Energy production to a minimum of 11,000 GW by 2030. Although Nigeria boasts immense solar potential, surpassing its oil and gas outputs with a daily irradiation equivalent to over a million tonnes of oil, Solar Energy merely represents a meager 0.2% of its installed capacity. As a result, its contribution to the country’s energy mix remains inconsequential.
Adoption of off-grid solar systems continues to face challenges.
A recent research carried out by Boston Consulting Group and All On, an impact Investment firm funded by Shell, reveals that the off-grid solar market in Nigeria experienced a significant compound annual growth rate of 22% between 2018 and 2022. This growth rate positions Nigeria among the countries with the most rapid expansion in Africa over the same time frame. Despite this remarkable progress, the adoption of off-grid solar systems in Nigeria continues to face challenges due to steep initial expenses. In fact, only a mere 1.25% of households in Nigeria have installed these systems thus far. It is also observed that installing solar power systems in 30% of Nigerian households by 2030 would reduce CO2 by 5 million metric tonnes.
Nigeria’s pressing energy Poverty crisis remains unabated, as the country harbours over 90 million individuals living off the grid out of its total population of over 200 million. To tackle this issue, there is a crucial need to establish a specialized fund derived from Fossil Fuel savings. Nigeria can effectively bridge the energy poverty gap by directing these funds towards the expansion of both on-grid and off-grid solar solutions. According to a new policy report by Agora, Nigeria is currently grappling with a surge in hunger, poverty, disease burden, migration, conflict, and Insecurity due to the impact of climate change.
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Climate change in Nigeria has far-reaching consequences, wreaking havoc on the country’s vital infrastructure, transforming its coastlines, exacerbating desertification, triggering water scarcity, accelerating erosion, and engendering substantial financial losses for both the government and states. Experts predict that by 2050, Nigeria’s cumulative economic toll due to climate change could amount to a staggering $100 billion. By the year 2080, Agricultural Productivity could potentially face a decline of 10 to 25 percent due to the repercussions of climate change. Certain regions in the northern parts of the country may even experience a drastic decrease of up to 50% in rainfed Agriculture yields. Consequently, climate change emerges as undeniably the most profound obstacle impacting Nigeria’s economic development.