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Nigeria needs $1.5bn to reduce emissions

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By Abraham Adekunle

IEA says oil majors, NNPCL and other investors will contribute the funds.

As Nigeria prepares towards achieving net-zero carbon emission by 2030, the latest report by the International Energy Agency (IEA) has revealed that Nigeria will need up to $1.5 billion between now and 2030 to reduce the amount of methane emissions released into the atmosphere in the country. Methane (CH4) is emitted during the production and transportation of coal, natural gas and crude oil. It also results from livestock and other agricultural practices, land use, and by the decay of organic waste in municipal solid waste landfills.

Other sources include a variety of anthropogenic (human-influenced) and natural sources. Anthropogenic emission sources include landfills, oil and natural gas systems, agricultural activities, coal mining, stationary and mobile combustion, wastewater treatment, and certain industrial processes. All these are significant if the government wants to achieve the objectives of the Paris Agreement that former President Buhari signed. At COP26 in Glasgow in 2021, President Muhammadu Buhari announced Nigeria’s aspiration to achieve net-zero by 2060. COP26 is the most recent of the annual climate change conferences that was hosted in the United Kingdom in November 2021.

FG already laid greenhouse emission reduction since the conference.

COP stands for Conference of the Parties. Its 26th edition was the world’s most significant summit on climate change and it was attended by the countries that signed the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC is an international environmental treaty aimed at combating dangerous human interference with the climate system by stabilizing greenhouse gas concentrations in the atmosphere. Even before the general elections held earlier in 2023, the administration of Buhari had shown that it was ready to lay the foundation that will aid the subsequent administrations to achieve net-zero.

According to a 2023 IEA report titled, “Financing Reductions in Oil and Gas Methane Emissions,” major oil and gas firms operating in the country had a responsibility to contribute $300 million to meet the target. In addition, the Nigerian National Petroleum Company Limited and other investors in Nigeria’s oil and gas industry will have to contribute $700 million and $500 million, respectively during the same period. The IEA said that it encountered challenges in mobilizing this level of investment, which included a shortage of funds in some cases, economic and institutional barriers, and a lack of infrastructure. There were also challenges in the area of awareness about emissions and the cost-effectiveness of abatement, the opportunity cost of investment in methane reduction, and capacity gaps in implementation.

Reducing methane emission cost-effective towards net-zero.

In the report, the agency emphasized the importance of reducing methane emissions in the global oil and gas industry if countries are to continue exploring fossil fuels for economic development. The report also revealed that one of the most cost-effective ways to reduce Green House Gas (GHG) emissions is to reduce methane emissions. This is because the abatement measures implemented would generate revenue from the sale of the captured chemical. As well, the agency said that reducing its emission from oil and gas operations is one of the most important measures to combat near-term global warming.

Energy-related methane emissions fall by around 75 percent by 2030 in the organization’s Net Zero Emissions by 2050 (NZE) Scenario. According to the report, two-thirds of this reduction comes from reducing chemical release from oil and gas operations. This contributes more than 15 percent of total energy-related GHG discharge reductions by 2030. It was stated in the report that just over $75 billion in cumulative spending is required by 2030 to achieve these reductions. The required spending varies widely by geography, operator, and part of the value chain. However, around $55 billion is needed in upstream oil and gas facilities and just over $20 billion in downstream operations.

Regulations and policies on abatement are essential, IEA says.

Methane abatement in the oil and gas industry is one of the cheapest options to reduce GHG emissions anywhere in the economy. Abatement measures would generate revenues of around $45 billion from the sale of captured methane. The IEA said that the primary responsibility for abatement lies with oil and gas companies. This is because the expenditure required to achieve it is less than two percent of the net income received by the industry in 2022. So, the agency said that regulations and policies on methane abatement are essential to achieving this objective. These can be paired with public financing, either directly from governments or through multilateral development banks. This will help catalyze private investments and fill gaps where private sources of finance may not be willing or able to invest at the levels needed.

Related Link

United States Environmental Protection Agency: Website

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