Nigeria must pursue increase in oil and gas production while also investing in clean energy as stipulated in its Energy Transition Plan, argues Godswill Ihetu
The Conference of Parties (COP) is an annual UN climate and nature summit, usually attended by heads of governments with the aim of arresting and controlling global warming and climate change. COP28 closed in Dubai, United Arab Emirates, on 12th December 2023, after two weeks of deliberations and negotiations. According to the UN Climate Change Executive Secretary, Simon Stiel, in a speech delivered at the closing of COP28, “we didn’t turn the page on the fossil fuel era, but the outcome is the beginning of the end” of the fossil fuel era. His conclusion highlights part of the final statement at COP28 which includes calls for accelerating efforts towards the phase-down of unabated coal power, phasing out inefficient fossil fuel subsidies, and other measures that drive the transition away from fossil fuels in energy systems, in a just, orderly and equitable manner.
Oil-producing countries opposed the idea of “phasing down” fossil fuels production, fought very hard to remove the “phasing down” and “phasing out” language from an earlier draft statement. The Secretary of OPEC, Haitham Al Ghais, called on OPEC members and allies to proactively reject any language that targeted “fossil fuels” rather than “emissions.” “Phasing down” or “phasing out” of oil and gas is a major issue for Nigeria as oil and gas production contributes significantly to Nigeria’s foreign exchange earnings and revenues in general. Any “phasing down” or “phasing out” of oil and gas in the near to medium term will significantly affect Nigeria economic development.
NNPC has often said that Nigeria will not be transiting away from hydrocarbons, meaning oil and gas in this case. Nigeria needs oil and gas revenues to be able to invest in the transition to clean and green energy. At COP28 the NNPC GCEO maintained the position that the African continent needs “a just, differentiated transition to enable it harness its resources for today, for the benefit of its future generations” in a continent where 75% of the population do not have access to electricity.
Recognizing that coal is the single biggest contributor to climate change, COP26 in 2021 agreed to reduce or “phase down” the use of coal for power generation. There was no statement on phasing down or phasing out oil and gas. In addition, much to the delight of the oil and gas industry, there was no decision to halt new investments in the industry, in spite of pressure to do so from some shareholder and environmental activists prior to COP26. Most of the oil majors said then that it would be a mistake to halt oil and gas investments. They insisted that fossil fuels, especially oil and gas, will remain the main source of global energy mix for decades to come, seeing that fossil fuels currently contributes about 80% to global primary energy consumption.
COP27 was held in Sharm el-Sheikh, Egypt last year. It was tagged the “African COP” because of a number of Africa related agenda issues debated. There were two main takeaways that were issues of major concern for Africa and Nigeria, namely, the decision to set up a climate loss and damage fund and the resolution “phasing down” rather than “phasing out” the burning of fossil fuels. On the latter,some delegates accused Egypt, which was host and president of COP27, of producing a text that “protects oil and gas petro-states and the fossil fuel industries,” Egypt being one of them. African countries vigorously argued that they must be allowed to continue producing their gas assets. African leaders emphasized the need for funds to exploit African extensive gas reserves to generate electricity in a continent where about 600 million people have no access to electricity. African delegates argued that the continent emissions is less than 4% of global emissions and see no reason why they should pay for the acts of commission by developed countries which have used fossil fuels to industrialize their economies over a period of two centuries, and therefore should bear heavier responsibility for achieving the global target of limiting temperature increase. They argue that natural gas can strategically be used to maximize Africa’s well being and for a “Just and Affordable Energy Transition,” and insisted that energy sources have to be accessible, available and reliable, and natural gas ticks all these boxes.
They insist that for resource poor countries of Africa, poverty reduction, energy security and economic development have priority over de-carbonization.” In summary, African countries were opposed to phasing down fossil fuels especially as more and more oil and gas reserves are being discovered in many African countries.
The lobby against fossil fuels was so strong at COP 27 that when Sultan Al Jaber, CEO of the Abu Dhabi National Oil Company (ADNOC), was designated the President of the just concluded COP28 in Dubai, his appointment faced much opposition. Many climate change activists felt that it was wrong to appoint someone who is deeply steeped in the oil and gas industry, the very industry that is largely responsible for dangerous emissions that damage the environment.In response he said “the world needs all the solutions it can get. It is oil and gas and solar, and wind and nuclear, and hydrogen, plus the clean energies yet to be discovered, commercialized and deployed.”
Now fast forward to the COP28 debate on fossil fuels. Of note is the fact that China, the US and India are the top three largest emitters of greenhouse gases, and are responsible for about 42% globally.
The irony in all of this is that while some of the wealthy countries are promoting the phase down of fossil fuels, following the Russian invasion of Ukraine, some countries in Europe have reactivated coal mines that had been closed for years. The US and UK have also awarded new oil and gas exploration licenses this year, while the US remains the largest oil and gas producer in the world. There is a lot of mixed messaging here.
Nigeria must pursue increase in oil and gas production while also investing in clean energy as stipulated in its Energy Transition Plan, in order not to be left behind in the global quest for cleaner energy sources. It is certain that the role of oil and gas will decline in the long term while renewables will increase. Oil and gas currently contribute 80% of the world’s energy mix, the question remains how quickly the world will be able to ramp up renewable energy sources to levels that would reduce the contribution of fossil fuels significantly. At COP 28 members were encouraged to treble investments in renewables. For Africa and Nigeria, in order to comply, funding remains an issue and pledges by rich countries since 2009 remain largely unmet. The pledges made at COP28 towards the new loss and damage fund for financial assistance to less developed countries were disappointing.
Dr Ihetu is a former Group Executive Director, NNPC and former CEO, Nigeria LNG
