Based On COP28 Consensus Agreement Nigeria Has 27 Years To Fully Tap Into Its Oil, Gas Sector
By Omono Okonkwo Omono Okonkwo, Nairametrics
On Wednesday, December 13, delegates concluded the COP28 conference in Dubai by reaching an agreement to transition away from fossil fuels by 2050.
The final text from COP28 urges all countries to abandon the use of fossil fuels without explicitly phasing them out.
The final text acknowledges the necessity for significant, swift, and continual reductions to restrict temperature increases to 1.5C. The UAE Consensus, featuring an unparalleled emphasis on shifting away from all fossil fuels, is purported to bring about a paradigm shift capable of reshaping global economies.
At the time of the final text presentation, COP28 president Sultan Ahmed Al-Jaber said:
“Together we have confronted realities and we have set the world in the right direction. Many more oil and gas companies are stepping up for the first time on methane and emissions. And we have language on fossil fuels in our final agreement for the first time.”
In this context, “fossil fuels” encompass coal, traditional biomass, oil, and gas. It’s important to note that during COP28, leaders committed to accelerating efforts in line with the goals of the Paris Agreement.
More than 100 nations pledged to triple renewable energy production, initiated the Loss and Damage fund, and major oil and gas entities committed to reducing direct emissions and addressing methane emissions. Furthermore, a declaration was signed by over 100 countries to confront the impact of food and land-use changes on carbon emissions.
The Nigerian context
Nigeria presently relies significantly on its oil and gas sector, constituting a cornerstone of its economy. However, amid the ongoing global discussions concerning emissions, the nation is actively considering a shift towards a gas-driven economic model.
The Buhari administration introduced the Decade of Gas Initiative and the Nigeria Gas Expansion Program (NGEP) as pivotal steps toward this transition. It is crucial to note that both initiatives are not yet operating at full capacity.
Furthermore, several months back, the Tinubu administration endorsed Compressed Natural Gas (CNG) as a viable alternative to petrol following the subsidy removal. This endorsement resulted from an agreement inked between the Nigerian National Petroleum Company Limited (NNPCL) and Nipco Gas Limited, slated to become operational in 2024.
Considering the agreement reached at COP28, Nigeria approximately has a span of 27 years to fully restructure its economy from its current dependence on oil and gas. However, questions arise regarding the
Kayode Oluwadare, the Regional Energy Partner and Director at the UK-based Energy Compact, highlighted a standard in the energy sector wherein investors aim to recover their investments within five years in viable energy projects.
Now, if investors approach Nigeria’s gas industry with a long-term perspective, how will they adapt their business strategies to align with the latest COP28 directives? Foreign investors are likely to exercise caution with oil-based investments, especially since numerous global banks have ceased funding oil-related projects in sub-Saharan Africa.
Oluwadare observes that the reluctance to invest in African oil projects will intensify further due to the COP28 final text, except for countries like China, deeply involved in oil and gas projects across the continent. Notably, China’s PetroChina is backing the Niger-Benin pipeline, set to commence exporting 90,000 barrels of crude oil daily in January 2024 under military governance.
Given this scenario, the pertinent question arises: How can Nigeria and other sub-Saharan African nations effectively transition away from fossil fuels by 2050, despite being signatories to the COP28 agreement? This shift poses a considerable challenge, especially considering the region’s historical reliance on these resources for economic sustenance.
Nigeria should be clear on its realities
COP28 youth delegate, Seyifunmi Adebote, told Nairametrics that COP28 has been described as successful and like many previous COP, it has produced a final text agreed upon by all parties dubbed the UAE Consensus. He referred to article 28D in the final text stating that parties will transition “away from fossil fuels in energy systems in a just, orderly and equitable manner, to achieve net zero by 2050 in keeping with the science.”
He said: “Looking at the place of Nigeria, being an oil and gas nation, what is more important is for us to be clear about what ”just” and ”equitable” means for Nigeria, as well as other developing countries. As President Tinubu said in his COP28 speech, Nigeria seeks to shift from oil and commits to reducing emissions by moving to cleaner energy sources, but this is only possible if developed nations finally honor their commitment to providing the needed finance and technology to help promote development.”
“In essence, Nigeria like many other oil-dependent nations may have agreed upon this text but except there is a tangible commitment from developed countries, I maintain that from the political demeanor of the current government, it is clear, maybe sadly, that Nigeria will remain oil-dependent and at best, ensure her development through the improved use of natural gas, in line with the existing ‘decade of gas’ policy.
What does Seyi mean by a commitment from developed countries?
Back in 2009, during the 15th Conference of Parties (COP15) of the United Nations Framework Convention on Climate Change (UNFCCC) held in Copenhagen, Denmark, developed nations pledged to collectively mobilize $100 billion annually by 2020.
This financial commitment aimed to support climate action in developing countries, contingent upon significant mitigation efforts and transparent implementation. The goal received formalization at COP16 in Cancun and was reaffirmed and extended to 2025 during COP21 in Paris.
That pledge is yet to be fulfilled by developed countries. According to a December 13 text by Sustainable Energy for All (SEForAll), the COP28 final text highlights a significant gap in addressing financial support within the context of climate action.
Acknowledging the responsibility of developed nations to support developing countries, there exists a lack of clearly outlined financial objectives aligned with the specific needs of these developing nations, particularly concerning their energy system transitions.
SEForAll highlighted that, to meet rising energy demands while adhering to the climate goals set in the Paris Agreement, annual investments in clean energy across emerging and developing economies must surge to $2.8 trillion by the early 2030s.
SEForAll emphasizes the urgency of this significant increase. However, the ongoing Global Stocktake primarily calls upon developed countries to collectively contribute $100 billion annually in climate finance.
This target, an earlier commitment that has never been fully realized, extends beyond clean energy investments and falls considerably short of the financial support necessary for developing nations to meet their obligations outlined in the Global Stocktake.
The Energy Transition Plan context
Energy Law expert, George Amos informed Nairametrics that Nigeria’s energy transition plan, initiated in 2022 during the Buhari administration, sets a 2060 target for the country to achieve carbon neutrality.
This plan aims to address emissions in various sectors, including Power, Cooking, Oil and Gas, Transport, and Industry.
According to him, there is a need to expedite the implementation of the Energy Transition Plan (ETP) to align with the agreed-upon deadline for integrating clean energy.