Some Key Policy Issues in Nigeria’s Sustainable Energy Challenges and Environmental Sustainability

By Michael Dugeri
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Nigeria, like other nations, has long recognised the potentials of renewable energy in the promotion of environmental sustainability. However, unlike countries such as China, Brazil and Germany, Nigeria’s huge renewable energy potentials have not been fully utilised. This is due to a number of factors, such as Nigeria’s overdependence on the crude oil revenue, lack of an overarching legal framework that articulates a comprehensive strategy for promotion of renewable energy and political will to drive enforcement and implementation of extant policies on renewables. One of the overarching objectives of Nigeria’s National Energy Policy is to guarantee adequate, reliable and sustainable supply of energy at appropriate costs and in an environmentally friendly manner, to the various sectors of the economy, for national development. However, a review of Nigeria’s legal and institutional framework on renewal energy development shows that the approach is not well focused on the ideals of environmental sustainability, as the emphasis seem to be more on energy access and sufficiency than on environmental sustainability. The many regulatory institutions that exist in both the power sector and the environment sometimes have overlapping mandates and responsibilities, resulting in disagreements between agencies over jurisdictional boundaries.

Environmental sustainability forms one of the pillars of sustainability development, the others being social sustainability and economic sustainability. It is an aspect of the development process which emphasises the harnessing of natural and social resources with major considerations for continuity and the future. Renewable energy sources such as biomass, geothermal, hydropower, solar and wind, energy sources are by their nature infinite and environmentally friendly when compared to conventional energy sources such as coal, oil and natural gas. There is, therefore, a global shift to support the promotion of renewable energy. Investment in renewable electricity would be desirable for increasing energy security, mitigating climate change and promoting economic development. However, Nigeria’s energy sector is dominated by oil and gas consumption. Most investments in the sector are currently in oil and gas generating plants. Owing to prolonged investments and economies of scale, the cost of generation of electricity from oil and gas is lower than that of renewable energy installations. Apart from hydropower, renewable energy sources hardly feature as part of Nigeria’s energy mix.

In many ways, Nigeria has demonstrated awareness of the need to promote sustainable development. However, while the post-1988 environmental law development period in Nigeria placed the environment at the center of sustainable development objectives of the country, it did not translate actual protection of the environment. Our environmental protection laws are not strictly enforced because the Nigerian economy relies heavily on fossil fuel, and serious environmental protection measures and/or enforcement would affect revenue from crude oil production and transactions. It then appears then that what Nigeria need is a way to balance its energy interests with environmental concerns, hence the importance of a legal and institutional framework for promoting renewable energy.

Nigeria is endowed with huge energy resources, yet it perennially suffers energy poverty. Moreover, the reliance on fossil fuel to meet Nigeria’s energy need has been attended with many problems such as physical deterioration of energy transmission and distribution facilities, inadequate metering system, increase in the incidence of power theft through illegal connections, manpower constraints and inadequate support facilities, high cost of electricity production, inadequate basic industries to service the power sector, poor billing systems, poor settlements of bills by consumers, inadequate generation capacity, deforestation, desertification, erosion and a host of other environmental problems. There is also the problem of energy access for the vast populated of Nigeria that reside in the rural areas. Adoption of renewable energy sources as alternatives to fossil fuel will greatly assist in addressing many of these challenges. Renewable energy is cheap because its resources are naturally replenished, evenly distributed and readily available, renewable at a reasonable rate, environmental-friendly, divisible into small units, and flexibly transmittable.

Nigeria is a signatory to the Kyoto Protocol and also has in place a National Policy on Climate Change and Response Strategy (2011) for implementing climate change activities in the country. The Kyoto Protocol is the international treaty which extends the 1992 United Nations Framework Convention on Climate Change (UNFCCC) that commits state parties to reduce greenhouse gas emissions, based on the scientific consensus that, firstly, global warming is occurring and secondly, it is extremely likely that human-made CO2 emissions have predominantly caused it. The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005. The National Policy on Climate Change and Response Strategy is a framework for tackling environmental challenges occasioned by global changes in climate. It is expected that this Policy will enhance Nigeria’s abilities to meet her obligations towards reduction of emission of noxious substances in the environment. The policy envisages a shift away from fossil fuel or coal-generated energy towards renewables as the resources to meet the local growing energy demand using clean technologies. Given Nigeria’s status as a fossil-fuel dependent economy with a large climate sensitive agricultural sector, the development of a climate change policy and response strategy is critical; as climate change portends a serious threat to poverty eradication and sustainable development in general. One of the key pillars of Nigeria’s Vision 20:2020 is investment in low carbon fuels and renewable energy. There are however, the challenges of effective implementation of the policy. The impacts of climate change in Nigeria require the widest cooperation and participation in an effective and appropriate national response comprising mitigation and adaptation measures that are efficient, concrete and targeted.

Since crude oil earnings have continued to contribute the largest share of government revenue, and since fossil fuel dominates the Nigerian energy mix, it has been a challenge for Nigeria to reduce carbon emission from energy activities, and this has continued to be detrimental to the environment. However, a careful balance of renewable and non-renewable energy sources in Nigeria’s energy mix will not necessarily result in a drop in revenue, if global best practices are followed in the design and implementation of the required policy, legal and institutional framework. The actual design of renewable energy support mechanisms is more important for effective and efficient support than the mere choice of support schemes a jurisdiction employs. Support systems for renewable energy can be investment or generation focused, wherein the regulation may be price-based or/and quantity-based.

The issue of deciding which policies for renewable energy development to choose cannot be answered in a general way. There is not one perfect support scheme that could be recommended for all countries. The choice depends upon different factors such as: the current market stage of the technologies, the budget available or the means of finance, the anticipated renewable energy targets, as well as the desirability and feasibility of the technology mix, with regard to the natural conditions in the respective country. A country’s choice of support system depends on its objectives and peculiar conditions. The support systems can be actualised through policy objectives and legal instruments. Policy framework for renewable energy can be direct or indirect, optional or mandatory. Lessons from other jurisdictions show that technology-specific support mechanisms have been the most effective and efficient, and that production-based support mechanisms are better for the development of renewable energy projects than investment-based support.

Nigeria needs a support scheme which is both effective and efficient. This is what the 2015 Regulations on Feed-In Tariff for Renewable Energy Sourced Electricity in Nigeria aim to achieve. Feed-in tariffs have become the policy instrument of choice for so many diverse economies around the world because feed-in tariffs are empirically proven to promote the fastest expansion of renewable electric power, at the lowest cost. They also do so more simply, transparently and democratically than other schemes. Unlike other mechanisms, such as tax credits or research and development subsidies, feed-in tariffs need cost governments nothing, being usually funded through costs spread among all electric utility customers, as part of their regular bill. They are performance-based, only paying for the actual output of renewable electricity, not just given out as a grant for purchasing the equipment. Feed-in tariffs work so well because they are simple and inclusive, allowing all players to invest. They are more transparent than other schemes, have lower administration costs, and when designed properly (and supported by appropriate planning laws) can get deployment moving very quickly. Generally, feed-in tariffs also accelerate the cost reduction of renewable energy technologies, making them cost-competitive with conventional energy sources at a much faster pace. At that point, no more support will be necessary. The question of how long support is necessary also depends on the ambition of the country in question. Although they can be used to meet a minimal target, they can also be applied aggressively to redirect money flows in a significant way towards creating a domestic renewable energy industry large enough to compete in the global market.

Using the law to integrate renewable energy into the Nigerian power sector will promote energy security and access, a clean environment and economic development. In order to effectively harness the potentials afforded by renewable energy, Nigeria needs to have a robust legal regime that promotes and regulates the development and utilization of renewable energy. With an abundance of natural gas in the country and with the potential of this form of fossil fuel serving as a transition fuel, the policy and regulatory framework must carefully balance Nigeria’s need for economic development vis-à-vis preservation of its environmental resources.

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