Nigeria’s $10 billion annual requirement to implement its energy transition plan on power sector reforms is already getting support from international partners. This is just as the World Bank pledged $1.5 billion and Nigeria is also in discussions for another $1.5 billion finance package from a US-based financial institution. Energy experts believe the recent launch of the ambitious Energy Transition Plan (ETP) in Abuja will further support plans for universal access to energy. Associate Editor ADEKUNLE YUSUF reports
With over 600 million people without access to electricity and about 900 million without access to clean cooking energy, it is an open secret that Africa grapples with serious energy deficit. Nigeria, being the most populous country on the continent, shares heavily in the energy crisis.
Although there have been various government efforts in Africa to provide access to electricity for all, many experts believe the recent global launch of Nigeria’s Energy Transition Plan (ETP) is the most coordinated and explicit move to attain this goal. At the launch, global leaders and stakeholders across the continent gave a clear indicator that, with a plan and adequate investments, universal access to energy by 2030 and a carbon-neutral energy system by 2060 is achievable. This, in the long run, will accelerate economic growth and development.
On Wednesday, 24th of August, the Federal Government demonstrated its commitment to a clean and sustainable future with the global launch of the country’s Energy Transition Plan. At the event, hosted by the Vice President, Prof. Yemi Osinbajo (SAN), announcements were made of possible future support by partners and a firm $1.5 billion commitment from the World Bank, with another $1.5 billion financing package from a US-based financial institution. The launch of the Energy Transition Plan (ETP) was attended by several government officials, private sector partners, development finance institutions, philanthropists, and international organisations. ETP showcases the country’s political leadership in the global energy sector, and especially on the African continent and demonstrates the willingness and capacity of the global community to support a just, equitable and inclusive energy transition.
At COP26 in Glasgow last year, President Muhammadu Buhari announced Nigeria’s ambition to achieve net-zero by 2060, drawing on insights from the country’s Energy Transition Plan, which was developed through the Energy Transition Commission to chart out Nigeria’s unique energy transition pathway. The plan supports the country’s objectives of achieving universal access to energy by 2030 and a carbon-neutral energy system by 2060; while also providing enough energy to power industry and other productive uses. The plan is supported by Sustainable Energy for All and the COP26 Energy Transition Council (ETC).
Given the urgency for accelerated action on climate aligned with the Paris Agreement, Nigeria is looking for more partners in innovation and finance at scale to enable a stable transition in energy markets and bottom-up transition pathways across energy markets, adaptation and resilience, nature-based solutions, clean cooking, gender, and green jobs. At the global launch held in Abuja, the conveners of the event highlighted some objectives that the ETP will achieve. According to them, it demonstrated Nigeria’s commitment and ambition in achieving carbon neutrality while also ending energy poverty, which will lift 100 million people out of poverty, drive economic growth, and bring modern energy services to the entire population; create awareness to drive demand in other African countries by emphasising the need for data-driven country-level energy transition plans in order to achieve a just, inclusive and equitable energy transition for all ahead of the ‘African COP’ hosted by Egypt; mobilise new partners by showcasing existing support for data-driven energy transition planning from international partners, including Sustainable Energy for All, World Bank, the Rockefeller Foundation, and the Global Energy Alliance for People and Planet; mobilise investors and the private sector by showcasing concrete projects to deliver the transition goals; while creating significant market opportunities; and to announce new opportunities for solar energy companies to obtain results-based finance from the Universal Energy Facility as part of a new financing window focused on supporting Stand-Alone Solar for Productive Use.
Speaking in Abuja, the chief host, Vice President Osinbajo, declared that Nigeria is seeking $10 billion from international partners to fund the nation’s new Energy Transition Plan, annually. This was just as the World Bank pledged to assist Nigeria in its energy renewal efforts with $1.5 billion. According to Nigeria’s number two man, a roadmap to tackle the dual crises of energy poverty and climate change is by engaging with partners to secure an initial $10 billion support package ahead of COP27 along the lines of the South African Just Energy Transition Partnership announced at COP26 in Glasgow.
“Nigeria would need to spend $410 billion above business-as-usual spending to deliver our Transition Plan by 2060, which translates to about $10 billion per year. Also, Africa’s increasing energy gaps require collaboration to take ownership of the continent’s transition pathways and the action should be decisive and urgent. For Africa, the problem of energy poverty is as important as our climate ambitions. Energy use is crucial for almost every conceivable aspect of development. Wealth, health, nutrition, water, infrastructure, education, and life expectancy are significantly related to the consumption of energy per capita.”
He highlighted the significant scale of resources required to attain both development and climate ambitions. For instance, the average $3 billion per year investments in renewable energy recorded for the whole of Africa between 2000 and 2020 will certainly not suffice. Making reference to the Nigeria Energy Transition Plan, Osinbajo said the plan was designed to tackle climate change and deliver SDG7 by 2030 and net-zero by 2060, while centering the provision of energy for development, industrialisation and economic growth. “We anchored the plan on key objectives, including lifting 100 million people out of poverty in a decade, driving economic growth, bringing modern energy services to the full population and managing the expected long-term job losses in the oil sector due to global decarbonisation.
“Given those objectives, the plan recognises the role natural gas must play in the short term to facilitate the establishment of baseload energy capacity and address the nation’s clean cooking deficit in the form of LPG. The plan envisions vibrant industries powered by low-carbon technologies; streets lined with electric vehicles and livelihoods enabled by sufficient and clean energy.”
On other aspirations of the roadmap, Osinbajo explained that the plan has the potential to create about 340,000 jobs by 2030 and 840,000 by 2060. It also presents a unique opportunity to deliver a true low-carbon and rapid development model in Africa’s largest economy. “We are currently implementing power sector initiatives and reforms focused on expanding our grid, increasing generation capacity, and deploying renewable energy to rural and underserved populations.”
Aside from the transition plan, the Vice President announced the launch of the Universal Energy Facility, “an innovative, results-based, finance programme that focuses specifically on scaling up electricity access for productive uses.” He explained that, “the Universal Energy Facility will provide grant payments to enable solar companies to expand their operations to small and medium-sized enterprises across Nigeria, while crowding-in additional private capital. Projects supported by the Universal Energy Facility will help grow businesses and create jobs, making them key contributors to our Energy Transition Plan. I’d like to encourage solar companies in attendance today to engage with this innovative financing opportunity, which is being managed by Sustainable Energy for All.”
Speaking on the effects of climate change in Africa, Osinbajo explained that, “climate change threatens crop productivity in regions that are already food insecure, and since agriculture provides the largest number of jobs, reduced crop productivity will worsen unemployment. It is certainly time for decisive actions, and we just cannot afford to delay. African nations are rising to the challenge. All African countries have signed the Paris Agreement and some countries, South Africa, Sudan, Angola, and Nigeria have also announced net-zero targets.”
Giving more details on energy poverty in Africa, Osinbajo noted that, “the current lack of power hurts livelihoods and destroys the dreams of hundreds of millions of young people. And although Africa’s current unmet energy needs are huge, future demand will be even greater due to expanding populations, urbanisation and movement into the middle class. It is clear that the continent must address its energy constraints and would require external support and policy flexibility to deliver this. Unfortunately, in the wider responses to the climate crisis, we are not seeing careful consideration and acknowledgement of Africa’s aspirations.”
Emphasising the importance of collaboration, he noted that, “we developed our Energy Transition Plan to engage with the rest of the world in a serious, thorough and data-backed manner. There is a clear need for African nations to engage more critically and vocally in conversations on our global climate future. More importantly, we need to take ownership of our transition pathways and design climate-sensitive strategies that address our growth objectives. This is what Nigeria has done with our Energy Transition Plan.”
In his remarks, Nigeria Country Director for World Bank, Mr. Shubham Chaudhuri, announced that the multilateral institution plans, “to commit over $1.5 billion towards the Energy Transition Plan on renewable energy, on power sector reforms, on clean cooking, and wherever opportunities arise.”
Lending his voice to the commitment, the CEO, Sun Africa, Mr. Adam Cortese, said that, “the launch of Nigeria’s Energy Transition Plan has further accelerated our efforts, proving Nigeria to be fertile grounds for investments in the sector.” Other speakers at the event commended Nigeria’s leadership and pioneering role in the region, noting the need for data-driven country-level energy transition plans that recognise the unique pathways each country would need to take in order to achieve a just, inclusive and equitable energy transition for all. The global launch also featured remarks from Nigeria’s top government officials, including, Ministers of Environment, Mr Mohammed Abdullahi; Power, Engr. Abubakar D. Aliyu; Power (State), Mr Goddy Jedy-Agba; Works and Housing, Mr Babatunde Fashola (SAN); Finance, Budget and National Planning, Mrs Zainab Ahmed, Finance. There was also the Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, Mr Mele Kyari; and the Managing Director, Rural Electrification Agency, Engr. Ahmad Salihijo.
Other speakers included the Deputy Secretary-General, United Nations, Amina J. Mohammed; Minister of Petroleum and Energies from Senegal, Dr. Aissatou Sophie Gladima; Minister of Electricity and Renewable Energy from Egypt, Prof. Mohamed Shaker El-Markabi; UN Secretary-General’s Special Envoy for Climate Ambition and Solutions, Mr Michael Bloomberg; as well as representatives of the United Nations, Sustainable Energy for All, the World Bank, African Development Bank, the International Renewable Energy Agency (IRENA), the Rockefeller Foundation and the Global Energy Alliance for People and Planet.