Orjiako: Transition to Renewable Energy Should be Balanced

As global leaders converge on Glasgow, Scotland, for the 26thConference of Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC), Peter Uzoho compiled excerpts of Dr. A.B.C Orjiako’s incisive interventions on energy transition and climate change at the 24th edition of the Milken Conference.

The 24th edition of the prestigious Milken Institute Global Conference, themed “Charting a New Course”, which recently held in Los Angeles, California in the USA, assembled top players and experts from various walks of life – government, business, finance, entertainment, technology, academia, philanthropy, and academia, among others – to brainstorm and proffer solutions to various subjects of global concern such as financial markets, food sustainability, climate/environment, diversity, equity, and inclusion, education, health, and entertainment, etc.

Among them was the Chairman of Seplat Energy Plc., Dr. A.B.C Orjiako, who featured in the panel discussion on “Energy and Commodity Markets: Structural Bull or Earthbound” where he analysed the race for energy transition and charted what he sees as a more pragmatic roadmap. Orjiak highlighted challenges in energy transition and proffered solutions, an intervention that participants described as timely.

The Challenges

According to Orjiakor, one of the biggest challenges in energy transition is continuous discordant tunes that people are beginning to sing.

“And what you’re seeing today with the bull in commodity prices is because there are completely uncoordinated plans where there is a heavy race towards transition. But the real message is that energy transition, zero or net carbon emission, is not the same as zero fossil fuels. I think that’s where the players got it wrong. So, there is a massive withdrawal of investible capital from fossil fuel investments. And quite a lot of funds go into renewable energy.

“Energy transition should be done in a manner where there is collaboration, and has to be properly balanced between the race to carbon neutrality or net zero and energy poverty that you see in Africa and other developing nations, “he said.

The Nigerian Context

Just to put things in context, he stated that in Nigeria with 200 million people, 12,500 megawatts installed capacity for grid power, has only three to four thousand megawatts of grid power.

“In the meantime, you have 25,000 megawatts off-grid power supplied by electricity generators. In this same country, more than almost 60 per cent of the population has no electricity. So, the luxury of turning the switch on to see light does not exist in the majority of the population.

“In this same environment, you find out that 80 per cent of the energy need is actually in the households where they are using firewood and kerosene to provide the energy they need for cooking. And there is added to all of these the health challenges, the poverty. How do you prioritise to transit to renewable overnight when you have the abundance of fossil fuels in that environment that can leapfrog the provision of power?

“So, when you talk about the Sustainable Development Goal 7 – access to sustainable universal electricity in an affordable and reliable manner – there is absolutely no way, in Nigeria for example, you leave almost 200 trillion cubic feet of gas reserves that can give you this electricity and power very quickly and then you transit and start using renewable, “he stated.

Threat of Climate Change

He stressed that there has been transition – wells, coal, liquid and gas – which took more than a hundred years and indeed still are evolving.

The difference this time, he said, is that because of all the obvious problems of climate change, there is some urgency of now.

“Therefore, everyone wants transition that will happen overnight. I think that is really the issue. This transition is being driven on the one hand by mere politics, activism, whereas what the whole players should be looking at should be more around the technology, innovations, and right policy so that you can have a coordinated transition globally. In fact, the Secretary-General of the United Nations made a statement calling on countries to stop investing in fossil fuels, which I consider rather activist. Look at the contradiction of that: SDG 7 speaks to universal access to affordable, and reliable energy. There is absolutely no way you can achieve that when you stop investing in fossil fuels, “he said.

More Realistic Approach

He added, “I thought the message should be “What do you invest in?” it should be to invest in technology that will continue to drive net carbon. Those who are producing fossil fuels should also, through policies, be made to put in place things that will do carbon capture, storage and sequestration.

“At Seplat, for example, what we have decided to do is to take off our flays. The Federal Government of Nigeria put 2030 as the year when there will be no more flays. But we made a deliberate decision to take out our flays by 2024. This will be taking out 2.8 million metric tons of carbon emission.

“We launched the natural approach to see how we can do effective carbon capture. We just launched what we call the “Seplat Tree for Life Programme” where we’re going to be using it to intensify our commitment and deepen it in terms of ESG. Once you do this, you’re addressing the environment because a lot of the carbon will be absorbed by the trees. And then, you’re going to be addressing very strongly the earth and the social impact investment will create jobs by mobilising a lot of youth to plant and maintain the trees, “he explained.

Carbon Tax/Credit

Carbon credit, he suggested, is really a very important incentive in addressing energy transition.

“But we should also have some standardisation about how to really measure the carbon footprint, what you really offset, and what you get credit for. If, for example, a fossil or an oil-producing company takes away flays, that shouldn’t give you carbon credit. But if you go over and above that and invest in areas that will help take away carbon and greenhouse gases from the atmosphere, then you should have the right credit for it. That will become an incentive to make people put in place things that will help create carbon neutrality. That’s why we (Seplat Energy) chose tree planting.

“Obviously, if you can make all energy in the world to be renewable, then all of the climate change crisis would come under arrest. However, where you don’t have the ability to do that today, a lot of emphasis must be on taking away the greenhouse gasses and the carbon.

“Again, using our home environment, a situation where you’re destroying the forests, you’re creating health hazard in homes, then that’s multiple problems for the society. One of the things we’ve done in our midstream business is to focus, not just on providing gas to power, but also to implement what we call LPG (Liquefied Petroleum Gas) penetration into the homes. Once you do this, you take away the firewood, you preserve the forest, you take away the HHKs (Household Kerosene), the fuels that create the fumes. In doing so, you’re protecting the people from hazardous fumes as well as helping the environment. So, it’s something you need to do in totality, “Orjiako said.

Solving Energy Poverty

In solving the energy poverty challenge, he stated that the Federal Government of Nigeria launched the Solar Power Naija programme to deliver solar power to about 5 million homes.

According to Orjiako, “Obviously, that’s not the massive scale renewable energy you’re talking about. When you’re looking at a huge gap, then it becomes more challenging. What’s happening is that there is mass population growth in Africa, and as this happens, people are migrating from poverty level wishing to become middle-income earners and things like that. And all of these come with growth in energy demand. When you have this kind of energy demand, you will find that it is very difficult to rely on just one source of energy to provide those. So, basically, we’re looking at a situation where there’s going to be growth.

“One thing I know will ultimately happen is that the percentage contribution of renewable energy to that mix will continue to grow. As the population grows, as the need for energy continues to grow, the percentage of fossil fuel contribution will be coming down as renewable energy is going up. But ultimately, the absolute number isn’t going to change much in those periods.”

The Seplat boss said the global demand for fossil fuel, for example, is about 100 million barrels per a day.

“If you factor in the natural decline of 10 per cent, what then happens? Even in 2050, when the real growth in energy and everyone wanting the fossil fuel business to go down, you find that that the contribution might come down from about 55 per cent today. It might be 40 per cent. But when you plus that overall demand for fossil fuel, you still find that the world will be consuming more than 100 million bpd. And that cannot just be supplied by renewable energy.

“Then another major point of focus, if we want to coordinate activities, is to go back to the Paris Agreement. The Paris Agreement is actually looking to make sure that the activities on earth do not cause rise in temperature beyond 1.5 to 2 per cent level over and above pre-industrial age. The attention will not only be to pull out investments in fossil fuel, but to begin to invest in technology, innovation, and policies that will remove the emission from the atmosphere, “he said.

What Energy Transition Means to Africans

On what energy transition means to Africa, he said: “Let me just paint you a picture of what energy transition really means, using a rural African or Nigerian woman as a reference point. A woman comes back home, having toiled the whole day in the farm. She has five or six children, who are hungry. Her first priority is not to switch on electricity. Her first priority is to cook food for the children, who are hungry. And to cook food, she will either light up the firewood or kerosene. So, the first thing I’ll do for energy transition is replace the firewood or kerosene with natural gas – LPG.

“The second thing I’ll do is provide very low-energy light bulb. It can use solar, it can use anything that is available or gas and provide her the power so they can even feed. That is the transition. And then, in doing that, you would have saved her from a lot of health hazards. So, putting it in totality, the real solution is to focus on a coordinated approach, globally.”