Achieving energy independence, sustainable development through just transition 

The pursuit of energy independence alongside sustainable development has brought the concept of a just energy transition to the forefront of policy discussions. With its abundant natural resources and vast renewable energy potential, Nigeria faces the challenge of balancing fossil fuel dependency with clean energy adoption and economic diversification, WALIAT MUSA writes.

Nigeria’s economy has been closely tied to its energy sector, with oil and gas contributing a substantial share of the country’s revenue and foreign exchange (FX) earnings. As one of the largest oil producers in Africa, the country’s crude oil exports have long been a key source of FX, enabling the country to finance essential imports and manage its fiscal obligations.

However, the volatility of global oil prices, coupled with production challenges, has often destabilised the economy. This underscores the need for the country to diversify its energy portfolio and tap into underutilised resources to not only fuel economic growth but also secure stable and sustainable FX earnings.

Energy independence is more than just an economic goal. It represents a nation’s ability to sustain its energy needs without reliance on external sources. For Nigeria, where oil and gas have long dominated the energy landscape, reducing reliance on imported fuels and fossil-based energy sources can stabilise the economy, protect against global oil price fluctuations, and ensure energy security for future generations which is vital for supporting industrial growth, enhancing productivity, and fostering innovation across sectors.

The vulnerabilities associated with the country’s dependency are well-documented as volatile oil prices, infrastructure challenges, and environmental degradation from oil exploration which have not only undermined the potential of the energy sector but also hindered the country’s overall development.

Energy independence, particularly through renewable sources like solar, wind and hydropower, is essential to decoupling economic growth from these uncertainties.

Globally, energy is the backbone of any economy, hence Nigeria needs to ensure a stable and reliable energy supply which is critical for industrialisation and economic diversification.

Power shortages and inconsistent electricity supply are among the most significant constraints on the growth of industries and businesses, hence, by achieving energy independence through a just energy transition, Nigeria can enhance its manufacturing capacity, improve productivity, and attract foreign investment.

Stakeholders in the sector emphasised that increased investment in renewable energy infrastructure can also create new sectors and markets, fostering innovation and entrepreneurship, they noted that small and medium enterprises (SMEs), which are the engine of the Nigerian economy, would benefit significantly from a stable energy supply, allowing them to scale operations, increase productivity, and compete on a global stage.

At the sidelines of the 2024 annual strategic international conference of the Association of Energy Correspondents of Nigeria (NAEC), the Chairman of the Petroleum Technology Association of Nigeria (PETAN), Wole Ogunsanya, emphasised the need for Nigeria to produce sufficient energy to support its economy.

He stressed that without adequate energy, SMEs would struggle to function, ultimately harming the country’s Gross Domestic Product (GDP) by reducing business productivity.

Ogunsanya explained that, according to the basic economic principle of balance of trade, the difference between production and imports, Nigeria has consistently faced a negative balance of trade, as the country imports more than it produces. He pointed out that a negative balance of trade leads to a weakened currency.

He stressed that the country needs to have enough foreign earnings, which can be deployed to develop infrastructures that would enable the economy to thrive.

“The rest of the world, if you go to South America, the United States, and of course the Middle East, the United States especially, their position as far as energy is concerned is to use all forms of energy that is available to them, the vast range of energy. They are not in any way reducing their oil and gas production. Today, the United States is the highest producer of oil and gas more than Saudi Arabia and they are, of course, investing in renewable energy, solar.

“So, for me, this is what Nigeria needs. We don’t have the technology to produce battery-powered cars, not that we will not do it in the future, but we should look at the immediacy right now,” he said.

PETAN Chairman emphasised the importance of sustaining the oil and gas value chain within the country, and urged the nation to prioritise gas, as it is a more efficient energy source and produces lower carbon emissions compared to other fossil fuels.
“How do we use the energy we have today, to be energy independent, to make sure that we have enough energy for our people to develop in the real sector of the economy? How do we generate the foreign exchange that we need to build infrastructures and develop this economy to be quite sustainable?” he asked.

Executive Vice President, Oando Clean Energy Ltd, Ademola Ogunbanjo, said it is widely acknowledged that the country is on the brink of chaos and that to stay relevant in the evolving energy sector, it is crucial to embrace the ongoing transition. He added that by anticipating these changes and making proactive investments in the sector’s development, one can maintain relevance in terms of sustainability.

He further emphasised that acknowledging climate change as a reality is essential, although it is often passionately debated in Africa that the continent contributes only about 3.8 to four per cent of global greenhouse gas emissions which is true.

He noted that the effects of climate change do not correspond to the level of contribution and unfortunately, Africa is facing the negative impacts of climate change even more severely than regions with higher emissions.

Ogunbanjo highlighted the importance of Oando’s geothermal energy project in collaboration with NNPC’s Research, Technology and Innovation (RTI) arm. The project aims to repurpose abandoned or end-of-life wells by utilising their technical profiles to extract heat to the surface and generate energy through a steam turbine which will support oil production activities in the field.

He emphasised that in their sustainable transport initiative, which focuses on rolling out electric buses for mass transit, they have successfully tested the technology with only two buses over the past year which reduced diesel consumption by approximately 86,000 litres by switching to electric power, served around 200,000 passengers, and covered about 176,000 kilometres.

“However, the business is not necessarily the transport business, what we are building is the next downstream business for mobility, one that will dispense electricity instead of diesel or petrol. That’s what we are doing, and it’s in line with the energy transition plan that commits to 100 per cent electrification of public transportation in Nigeria by 2060.

“Though published only about three years ago, we have seen the behaviour of the government negating even just that commitment, that action alone negates the commitment we bring to the world and that’s part of the issue we have when we talk about investments in all the different sectors. The policy says one thing, the government does something else. The inconsistency does not in any way encourage investment. We do not deny the fact that gas as a transition fuel has a role to play even in sustainable transport, but we believe gas should power charging stations and not fuel vehicles,” he said.

President of the Nigerian Association of Petroleum Explorationists (NAPE), Dr. Abiodun Ogunjobi, stressed the importance of having clear and consistent policies on energy transition to attract investments.

He pointed out that while Nigeria has the potential for significant production, it is currently underperforming. He attributed this decline to the uncertainty surrounding investments related to the Petroleum Industry Act (PIA).

He expressed confidence in the industry’s ability to transition to renewable energy but emphasized that it will require significant capital investment. He also noted that the industry must leverage its existing resources to prepare for the future that everyone envisions.

“We need to drill more, we need to expand more, we need to increase our reserves and use the resources that we have, now that they are still valuable. There was a time when we were depending on coal in this country, who produces coal today? Nobody, that coal is still down there.

“This is a clarion call for everyone, the government should support the industry in producing our vast amount of gas, produce all our oil resources so that we can use the revenue that is derivable from this investment to navigate our way to the future energy that we are talking about. Otherwise, the story of our oil today may not be different from that of coal in years to come if we continue at this pace of our reserved production.

“We are producing but we do not have a reserve and when we get to a point that we exhaust everything that we have already discovered, where are we going to get the replacement?” he said

Ogunjobi stressed the need for clear and transparent policies before embarking on the energy transition, pointing out that without such policies in place, investors will be reluctant to commit.

He emphasised that to ensure energy security, Nigeria must maintain a balanced energy mix, utilising its available resources such as solar, hydro, wind, and power. He added that all energy sources should be integrated, and the government must ensure that all generated power is effectively fed into the national grid.

“Many of us have solar power in our homes and we produce at times more than what we can use. Where do we keep the excess? Nowhere because we are off-grid, So, there must be energy efficiency in this country and the government should also incentivize energy efficiency,” he said.