Abstract
Fossil fuels have been the mainstream of energy supply and a major source of foreign exchange earnings for the Federal Government of Nigeria, in spite of being an unrenewable and unsustainable source of energy. Nigeria is yet to tap into the full benefits after privatising its power sector, including the new global evolution in the energy sector and the resulting increasing demand for renewable energy sources, which some consider to be cheaper and more environmentally friendly than fossil fuels and their allied products. Energy security is a challenge to socio-economic development in Nigeria, due to the country’s over-dependency on fossil fuels. In terms of their impact and the potentials to preserve energy sources for longevity and sustainability, however, fossil fuels will come to be seen as an out-dated alternative in the power sector as the energy industry evolves. The implications for Nigeria’s oil sector will not be limited to dwindling crude oil prices. The concerns include poor energy utilisation in Nigeria and the need to promote energy efficiency and sustainability. They have led to the formulation of new energy policies around the world to serve as a vehicle for translating solutions into reality. This study has adopted a library-based legal research method with a comparative approach. The study reveals that it is the lack of a coherent legal framework with incentives for using renewable energy that is largely seen as the key issue causing slow uptake of renewable energy as an alternative source of energy in Nigeria. As well as the need for a coherent legal framework on energy and incentives for using renewable energy sources, the study advocates stringent enforcement of existing energy regulatory policies.
Fossil fuels have long been the mainstream of energy supply across the globe due to the high level of dependency of many countries on fossil fuels as their major sources of energy and foreign exchange earnings with the corresponding oil booms. Fossil fuel usage, unsustainable globally, has been recognised as a source of greenhouse gas (GHG) emissions (Oniemola and Sanusi, 2007). The environment is under threat from crude oil exploration and exploitation, because of the gradual warming up of the earth’s atmosphere and depletion of the ozone layer resulting from increased GHGs emitted into the air.
In Nigeria, humans, flora and fauna have suffered greatly due to the environmental pollution and degradation resulting from the incidence of oil exploration activities in the Niger Delta region of Nigeria (Olujobi et al., 2018). Hence, there is the need for a new energy policy that will promote renewable energy in the country. Beyond privatisation, the power sector requires some operational and regulatory restructuring for a sustainable, ecological and community-friendly energy regime in Nigeria.
The Federal Government of Nigeria has enormous reserves of natural resources for alternative energy production, such as fertile arable land and climatic conditions that favour the production of feedstock (sugarcane, cassava, palm oil and maize among others).
Energy policy is the plan of action or statement of ideals proposed or adopted by the Federal Government on the sources, nature, availability of fuel and other alternative resources used for operating machinery. A new energy policy would allow the various governments to depart from the use of fossil fuels such as coal, oil and natural gas to embrace alternative sources such as biomass, solar, wind, hydro-power, geothermal heat and biofuels, among others. These latter sources can be obtained from non-fossil and non-nuclear resources in modes that can be restocked, hence they are environmentally friendly.
Renewable energy is one element of the decentralised energy sector in Nigeria. To optimise the benefits of renewable energy in Nigeria, it requires proper planning and a definitive legal regime on renewable energy to encourage investments in the sector.
Hence, this article highlights an overview of the country’s energy situation, and a review of the relevant literature, followed by a cursory look into the various alternative renewable sources of energy, their potential benefits and challenges, followed by a look at the legal framework on energy, and then at the current situation and new energy policy in Nigeria. It will then undertake a brief comparative analysis of the legal framework on renewable energy and from there, draw conclusions and proffer recommendations for the way forward.
Statement of the Problem
The Federal Government of Nigeria has no coherent legal framework for renewable energy. Policies on energy are scattered and incoherent. The demands for electricity outweigh supply and this has affected social and economic development in the country in the areas of poverty alleviation, industrial productivity, electricity, consumer welfare, human health (e.g., smoke inhalation from indoor cooking without electricity or other power) and other aspects of the lack of a power grid. If this problem could be addressed, it could reduce carbon from burning fuel, mitigating GHG emissions and also helping to prolong the availability of Nigeria’s petroleum resources.
Countries such as China, India and Germany are among the leaders in the development and usage of renewable energy. They have enacted coherent legal frameworks on renewable energy use and development – something the Federal Government of Nigeria has not yet done. Nigeria’s existing policies on renewable energy are scattered throughout various policy documents, rendering them somewhat incoherent when analysed as a group.
The energy supply system in Nigeria is inefficient and unreliable, resulting in losses that sometimes amount to more than 30 percent of the total electricity generated. As a consequence of power unreliability, over the years most industrial enterprises and upper-income households have installed their own (very expensive) generating systems, which collectively account for over half of the total installed grid capacity. This constitutes a huge economic loss to the Nigerian economy. The major factors causing unreliability and inefficiency in the power sector include frequent breakdowns of generating plants and equipment due to inadequate repairs and poor maintenance; lack of foreign exchange to purchase needed spare parts on time; obsolete transmission and distribution equipment which frequently breaks down; and a lack of skilled manpower as well as inadequacy of basic industries to service the power sector.
Other important issues include poor energy financing, low technical capabilities in the energy sector and a weak institutional framework. The energy sector is a large consumer of national budget, demanding large capital expenditures, skilled manpower and steady foreign exchange outflows. The country lacks a binding, enforceable legal or regulatory framework to govern and manage renewable energy utilisation for national growth and socio-economic development in Nigeria.
Research Methodology
The objective of this study is to examine the options and prospects for Nigeria’s implementation of the type of new energy policy that has been embraced by several countries to promote energy security and sufficiency. The Federal Government of Nigeria must depart from the use of fossil fuel and embrace alternative sources such as renewable energy, to help halt global warming and the depletion of the ozone layer resulting from GHG emissions. Humans, and flora and fauna, have suffered greatly due to the environmental pollution and degradation resulting from oil exploration activities in the Niger Delta region.
To achieve this objective, the researchers applied a library-based doctrinal legal research method, supported by a contextual legal analysis, including reference to internet sources, an extensive review of academic literature, examination of case studies and the analysis of relevant judicial and statutory provisions with a comparative analysis of the legal framework for promoting renewable energy in China, Spain, Germany and India among others. The study has used both primary sources (such as case law) and secondary sources (such as journals and textbooks), and its results suggest the need to use the lessons learnt to enact a regulatory policy or legal framework on renewables to guarantee energy sufficiency and security in the sector.
Theoretical Framework on Renewable Energy in Nigeria
The “resource curse theory”, developed in 1970– 1990, has been useful in this study by emphasising that, regardless of the energy resources they possess naturally, developing countries must ensure the promotion and development of renewable sources of energy through a coherent legal framework that will protect and prioritise their social, economic and environmental interests to meet the current needs as well as those of future generations. Developing States must ensure that intensive extraction of their extractive resources does not promote development and may actually be the source of other crises often associated with resource-rich States, such as mass poverty and poor social infrastructure. This theory applies to Nigeria, whose abundant petroleum resources must be used in a way and at a rate that enhances her social and economic development and sustainability.
As the Resource Curse Theory points out, resource-rich countries frequently fail to attain the economic prosperity and developments that are often expected to be commensurate with their abundant petroleum resources, due to the prevalence of violence and corruption, coupled with a failure to diversify their economies in other directions such as agriculture and mineral extraction to enhance their industrial development and their ability to combat environmental challenges. There is therefore the need for stringent enforcement of extant laws on transparency in the extractive industries and other environmental laws to protect social, economic and other environmental interests in the sector (Oyewunmi and Olujobi, 2016).
The application of the sustainable development concept to environmental issues originated from the Stockholm Conference on the Human Environment in 1972 where participants maintained that governments should use their extractive resources in a sustainable manner for development that satisfies the current needs of their populations without compromising the capacity and the needs of future generations. The aim is to balance the needs to utilise extractive resources, develop investments, and make technological and institutional advances whilst complying with international best practices for sustainability. The theory emphasises the need to use natural resources for the value and benefits of the lives of present-day generations and for upcoming generations without damaging the earth’s ecosystems.
Global Action
The call for a new energy policy is a global phenomenon and reflects and addresses a challenge that is currently one of the most difficult problems impacting the world – the need to continue generating energy or power without accelerating climate change, damaging the environment or harming food production. According to Jurgen Tritten, Germany’s former Federal Environmental Minister, the utilisation and growth of renewable energies is a situation where all stakeholders will benefit in one way or another including both developed and the emerging countries. Renewable energy preserves the environment, it eradicates poverty and it promotes technologies and creates job opportunities in the energy sector. The emphasis on the utilisation of renewable energy conforms with the resolutions that came out of the World Summit on Sustainable Development convened in Johannesburg, South Africa in 2002, where over 30 nations declared their intention to promote the use of renewable energy sources and to position their energy agendas in order to accomplish this objective.
Many countries such as Israel, China, Germany, Chile, Spain and Denmark have made a paradigm shift towards new renewable energy policies. For instance, Brazil has demonstrated an unalloyed commitment to the growth of renewable energy by enacting its contemporary Hydropower Policy, Biodiesel Policy and Ethanol Policy. The UK, during the period 1990– 2004, multiplied the electricity it generated from renewable energy by a factor of twelve. Kenya generates 923 MW of geothermal energy, as well as using solar and wind energy for electricity. The 2012 Kenyan Energy Regulations made installation of solar water heaters compulsory in all buildings especially where more than 100 litres of water are consumed per day. Successful integration of renewable energy into these countries’ energy systems was possible through stringent and coherent enforcement of their energy legal framework (Olujobi, 2017).
The energy policy envisaged by the former US President, Barack Obama, sought to harness alternative sources of energy believed to be cheaper and more environmentally friendly than crude oil and its allied products. It proposed a “new energy economy” that would identify clean energy investment opportunities, intensify efforts to improve fuel efficiency in automobiles, lessen GHG emissions and ensure that at least 25 percent of the nation’s energy originated from renewable resources such as wind, solar and geothermal (Lukman, 2009).
The International Energy Agency, in its world energy viewpoint on how policies can shape the international energy market, energy precautions and other energy-related concerns, raised two questions. First, how can international energy markets improve innovation in the development of governmental strategies on energy sectors? Second, how can international energy markets improve in the absence of such innovation in governmental energy policies?
Literature Review
Several legal scholars have written on the need for renewable energy in Nigeria but none has considered the potential and the impact of renewable energy on Nigeria nor noted the need for strict adherence to the new energy policy. Omorogbe (2016) considered a legal framework on renewable energy as a necessity for national development and for the sustainability of the energy sector. In comparing renewable energy and conventional energy sources, Ajomo (2001) and Sagay (2005) drew the attention of the Federal Government’s regulatory authorities to the complex nature of petroleum resources ownership and governance in Nigeria that is solely vested in the Federal Government, which has hindered active investment in the electricity supply to the rural populations in Nigeria.
There is a need for all levels of government to be allowed to participate in electricity generation and distribution through the amendment of the extant energy policies; however, the role of renewable energy and its socio-economic and environmental impacts have not been thoroughly discussed. These various scholars appreciated the importance of renewable energy but their papers fail to formulate a model legal framework suitable for Nigeria’s energy challenge.
In Kenya, renewable energy has been made a national development priority. No similar policy exists in Nigeria – the recent National Energy Policy suggests the use of renewable energy sources but fails to designate the reduction of carbon emissions as a national concern nor to address the unreliable supply of electricity to its consumers across the country.
Oke (2016), in his book Essays on Nigerian Electricity Law, observed that the major problem with the regulatory and governance framework in Nigeria was over-centralisation of the management, responsibilities and administrative structures of the power sector. Decentralisation has helped many countries to overcome power supply challenges through off-grid renewable electricity generation, transmission and distribution for rapid rural electrification, leading to social and economic development. Nigeria could follow suit and move towards more sound governance of its electricity.
Alternative Energy
Renewable Energy Opportunities for Nigeria
There are a number of unexplored renewable energy opportunities available in Nigeria. These include biomass/bio-fuels, wind, solar and hydro-power, to name but a few.
“Biomass” refers to the biological material that may serve as a source of renewable energy, and thus could provide an uninterrupted power supply to rural areas through a rural electrification programme. It is derived from living organisms. Different forms of biomass can be burned or digested to produce energy. Such energy certainty could improve the livelihoods of rural dwellers. Bio-fuels are fuels made from biomass. They are the cheapest and most accessible source of energy. One of the most common is ethanol, derived from fermenting and distilling starchy cereals, grains and crops such as beet, wheat, corn, sorghum and sugarcane (Yusuf, 2006). Another biofuel, biodiesel, is derived by converting oil-bearing crops (including coconut, soy, palm, rapeseed, sunflower) and even chaff, wood and straw to methyl esters to blend with conventional diesel (Piters, 2010). Biogas is another biofuel which is obtained from unprocessed and discarded materials such as animal faeces, and biodegradable manufacturing and domestic solid waste materials. Despite the relative benefits of bio-fuels and the abundance of biomass in Nigeria, there are no laws or policies as yet on biomass as a source of renewable energy.
Wind energy is another source of renewable energy that could help to stabilise the electricity supply to consumers in Nigeria. The technologies necessary to harness this energy are mainly available from China, India and Iran among others. Wind energy is categorised as highly ecologically responsive. It involves the installation of wind turbines in wind farms in areas where winds are durable and persistent, for instance in offshore and high-altitude locations. The wind turbines are run by airflows and the power production depends on the cube of the wind velocity; as the wind velocity intensifies, the energy production increases.
As a source of energy, hydro-power is cheaper and easily maintained. There are many forms of water energy, including hydroelectric energy, micro-hydro systems, dam-less hydro, and oceanic (wave/tidal) energy among others.
Geothermal energy is another alternative. It is obtained by tapping into the high temperature of the earth kilometres deep into the earth’s crust in some places or just metres deep in other places.
Finally, solar energy is obtained from the sun through devices such as photovoltaics, which receive and convert solar radiation and heat into a usable energy source. Solar energy is used directly and indirectly for space heating and cooling, day lighting, water heating and steam generation for commercial energy generation. This is abundantly present in Nigeria due to abundant amounts of sunshine, and as such can be cost-effective and can stimulate sustainable development in the rural areas in Nigeria. The technology has not been fully accepted by all households, however, despite efforts to create awareness of its use and effectiveness. The absence of a specific legal framework on solar energy is a challenge embedded in the current National Energy Policy and the Policy Guidelines on Renewable Electricity in Nigeria generally. There remains, however, an urgent need for a clear, simple and unambiguous legal regime on solar energy as a renewable energy source in Nigeria.
[Image provided by the authors].
[Source: Earth Connection. Available at: https://www.scearthconnection.org/renewable-energy-vs-fossil-fuels/ (accessed September 24, 2019)].
The Benefits of Renewable Energy in Nigeria
As noted, there has been a strong new interest in renewable energy sources, which hold some attractions not found in fossil fuels.
Firstly, renewable energy enhances energy security which is currently under threat due to the spiralling oil prices, crude oil theft and pipeline vandalisms, depletion of oil reserves and the increasing cost of crude oil exploration activities – all pointers to the fact that the availability of fossil fuels may not be guaranteed forever. A diversified energy programme would allay the fears of energy insecurity and unsustainability in Nigeria.
Another economic benefit of renewable energy is that its costs are relatively low compared to the costs of extracting, tapping and harnessing energy from fossil fuels. In terms of financial expenditure, alternative energy would become cheaper than fossil fuel. Environmentally, pollution and degradation as well as the global warming of the atmosphere are all associated with the exploitation and usage of fossil fuels, while renewable energy is environmentally friendly. Thus, increased use of renewable energy will improve the quality of the environment by contributing to a global reduction in GHG emissions.
Another benefit of renewable energy is its sustainability. Renewable energy is naturally restocked. The collection, transformation and consumption of renewable energy may often take place in an ecologically friendly manner.
Excessive reliance on and expectation of the continuation of crude oil revenues has affected the growth of alternative energies in Nigeria. Energy diversification will promote energy security for the country. The international demand for Nigeria’s crude oil is declining. The need for the enhancement of alternative energies from other domestic energy resources should be exploited. From the foregoing statement in the Policy, it could be distilled that the purposes of the policy are to foster viable energy sources for optimum energy fusion in a sustainable and ecologically friendly manner to diversify national energy usage from its excessive reliance on petroleum products; and to cushion the consequence of diversification.
FourWays to Conserve Energy and Electricity at Home [Available at: http://stevensonlabs.com/four-ways-to-conserve-energy-and-electricity-at-home/ (accessed September 24, 2019)].
Among the expected benefits of the diversification of energy are expansion of the rural economy, security of energy supply, a better environment and maximising carbon credit opportunities. It would provide direct and indirect employment in the new industry, free up more crude oil for exports, boost Federal and state government tax revenues, and provide a return on investment to farmers and other stakeholders in the sector. It would create different and more beneficial opportunities for direct foreign investments into the Nigerian economy.
The Obstacles to Renewable Energy as Alternative Sources of Energy in Nigeria
Clearly, renewable energy has overwhelming benefits, but it is not devoid of side effects. For example, although renewable energy technologies are often characterised by lower levels of air-pollutant emissions during production, the consumption of some of them (especially bio-fuels) may emit pollution through combustion (Steenblik, 2005). Thus, they may still pose some level of threat to the environment and human health.
To meet the demands for bio-fuels, some countries have seen their environment degraded through deforestation, soil erosion and other factors. This puts biomass in conflict with the aims of finding alternative sources of energy.
Another challenge relates to food security. The crops most commonly raised for bio-fuel include cassava, sugarcane, maize, millet, soybeans and palm oil, all of which are staple foods for Nigerians. Production of bio-fuel entails very high demand for these crops. A recent United Nations report indicates that attempting to develop agricultural crops for alternative energy use may put enormous strain on dwindling water resources as well as arable land for food, and thus endanger food security. It could lead to shortage of food during periods of drought or famine, forcing land to be devoted to for bio-fuel production.
The expansion of agricultural land for the production of bio-fuel crops could intensify the conflicts already arising concerning land rights. The circumstances could force many countryside inhabitants to migrate to urban areas when they lose vital access to their natural resources such as water due to intensification in agricultural activities for bioenergy resources.
The most significant hurdle that must be overcome in developing renewable energy in Nigeria is technology. Apart from hydro-power, solar and bio-fuel technologies, no other renewable energy technology has been developed in Nigeria. Most such alternative energies rely on production technologies that have to be imported at outrageous costs. The level of mechanisation in Nigeria’s agricultural sector is lower than what is required for the improvement of farming practices to enhance quality and good yields.
There are also infrastructure problems to be addressed, such as poor power supply, impassable road networks and poor water supply. These are critical to the production, processing and distribution of both agricultural produce and other materials important to the success of the renewable energy programme in Nigeria.
Public awareness in Nigeria is very low with regard to renewable energy sources and technologies, and their economic and environmental advantages. Nigerians are not well enough informed to put pressure on the Federal Government to develop renewable energy resources and technologies for commercialisation in the domestic energy market.
Renewable energy can also have adverse effects on the environment. Wind turbines, for example, are often thought to be aesthetically unpleasing. Industrial conversion to the production of alternative energy equipment might also have environmental costs, however, its potential benefits are more important to the developing economy. The renewable energy industries could provide an incentive for more industrialisation, encouraging industries and the Federal Government towards rapid industrialisation. If carefully overseen, this will enhance the standards of living of Nigerians, and will lead to energy sufficiency and security, and a safer, more harmonious and stable society.
A final obstacle with regard to many renewables is source uncertainty. For example, many kinds of renewable energy depend on weather conditions, so that unpredictable weather can impact negatively on the consistency of the energy supply. For example, hydro-generators require sufficient rain to fill the dams for their supply of flowing water. Wind turbines require wind to turn their blades. Solar panels require clear skies and sunshine. If the weather is problematic, it’s hard for alternative energy systems to produce power as consistently as non-renewable sources. It can be too demanding to produce the volume of power turned out by the conventional fossil fuel generators.
Legal Framework and Regulatory Institutions Overseeing Renewable Energy in Nigeria
Under the 1999 Constitution of the Federal Republic of Nigeria, matters related to the generation, transmission and distribution of electricity are included in the Concurrent Legislative List. This allows all tiers of government to be involved in most aspects of the electricity supply industry (Paragraph 14 of Schedule II of the 1999 Constitution as amended).
The National Electric Power Policy (NEPP) of 2001 was the precursor to the Electric Power Sector Reform (EPSR) Act of 2005. Most of the significant provisions of NEPP are included in the EPSR Act which emphasises the role of renewable electricity in the overall energy mix, especially for expanding access to rural and remote areas. In the National Energy Policy of August, 2003, the overall thrust of the policy is stated as “optimal utilization of the nation’s energy resources for sustainable development of Nigeria’s power sector”. Other energy policies are the National Renewable and Energy Efficiency Policy, 2015; Draft National Energy Master Plan, 2014; National Energy Policy, 2013; Renewable Energy Master Plan, 2012; Nigeria Vision 20: 2020, 2010; Draft Renewable Electricity Policy, 2006; and the Renewable Action Plan among others.
The Federal Ministry of Power and Steel has the overall responsibility for formulating electric power policy, including the policy on renewable energy. The Ministry has the following authorities and responsibilities among others: powers to propose policy and to make recommendations to the Federal Government concerning legislation, policy and investments in renewable electricity; powers to monitor and evaluate the implementation and performance of the policy within governmental agencies and in the electricity market; power to evaluate the performance of renewable electricity policy by increasing access to electricity in rural areas in Nigeria and by ensuring that Nigeria’s renewable electricity policy is consistent with national obligations within regional and international organisations; obligation to liaise with the National Assembly on matters relating to renewable electricity production and use in Nigeria.
A research agency called the Bio-fuels Research Agency has been tapped to coordinate biofuel research in Nigeria and to work with the Ministry of Agriculture and Ministry of Science and Technology on crop production and technology. Unfortunately, the ministries have not been proactive in driving these projects due to lack of funds and of the required technical know-how on renewable energy.
The Ministry is to register all bio-fuel projects, and issue licences to operators for the production of fuel ethanol or bio-diesel in Nigeria. It must also formulate and recommend financial and other incentives for the industry among others. Renewable energy will boost Nigeria’s electric power sector since the current electricity supply meets only one-third of Nigeria’s consumption needs. It will conserve non-renewable energy sources; for instance it will preserve Nigeria’s 36.5 billion barrels of crude oil reserves by shifting the focus from crude oil to renewable energy thereby guaranteeing a clean, inexhaustible energy supply, protecting humans and the natural environment for socio-economic development, and guaranteeing sustainable energy security for all Nigerians.
The promotion of a growing market for renewable electricity requires an effective and independent regulatory agency. The Nigerian Electricity Regulatory Commission was established by the EPSR Act to carry out the following functions among others: to create, promote and preserve efficient industry and market structures; to ensure the optimal utilisation of resources for the provision of electricity services; to maximise access to electricity services, by promoting and facilitating consumer connections to distribution systems in both rural and urban areas; and to ensure that an adequate supply of electricity is available to all consumers.
These issues have been seen as extremely important and received judicial attention. In Amadi v. Essein (1994) 7 NWLR (Pt.354) 91 at 112, the court affirmed electricity regulation and the protection of rights of electricity consumers in Nigeria.
The Rural Electrification Agency was established by the EPSR Act 2005. Its primary functions include: extending the main grid and developing isolated and mini-grid systems; generating power from renewable energy; coordinating renewable electricity activities amongst state and Federal agencies; and carrying out such duties as may be assigned by the Honorable Minister of Power and Steel.
The Energy Commission of Nigeria was established by Act 62 of 1979 as amended by Acts 32 of 1988 and 19 of 1989 and is charged with the responsibility of conducting strategic planning and coordination of national policies in the field of energy in all its ramifications. The major objectives of the Commission are to guarantee increased contribution of the energy sector to national income and the economy; guarantee adequate, sustainable and optimal supply of energy at an appropriate cost and in an environmentally responsible manner to the various sectors of the economy by utilising all viable energy resources in an optimal mix; and promote increased investment in and the development of the energy sector industries with private sector participation. The Commission is to ensure that evolving policies conform and are harmonised with the overall thrust of the National Energy Policy, and that all other relevant agencies are consulted in the implementation of the policy, namely, Federal Government agencies, State Rural Electrification Boards, relevant State ministries, and private-sector and non-governmental organisations.
Recent Developments in the Bio-fuel Industry
In August 2005, the Federal Government, through the Nigerian National Petroleum Corporation (NNPC), created the Renewable Energy Division to develop renewable energy initiatives with the obligation of harnessing bio-fuels in Nigeria for the satisfaction of energy customers. In 2007, Nigeria approved a policy on bio-fuels called the Nigeria Bio-Fuel Policy and Incentives. The policy was endorsed by the Federal Executive Council on 20 June and gazetted as a national bio-fuels policy. Under the policy, the NNPC was to create an institutional environment for the commencement of a domestic ethanol fuel industry. Africa’s first ethanol refinery was opened in the Ekiti State (established in 1996 – formerly part of Ondo State) in 2009. Its aim was to reduce Nigeria’s over-reliance on imported gasoline and to create a commercially sustainable industry that can provide jobs for its burgeoning youthful population, but this has not happened. Over US$4 billion has been set aside for sugarcane-sourced ethanol projects in Jigawa and Benue States while cassava-sourced ethanol projects are to be set up in Anambra and Ondo States.
The Implications of the New Energy Policy on the Petroleum Sector in Nigeria
Nigerian crude oil brings in over 90 percent of the country’s foreign exchange earnings. This has hitherto been the glory of the petroleum sector in Nigeria. The alternative sources of energy being promoted by the new energy policy have numerous benefits over fossil fuel.
The new energy policy underscores the need to reduce over-dependency on crude oil as an energy source in Nigeria. The policy came at the right time, just when the US redirected its national energy policy to embrace a drastic reduction of crude oil consumption to reduce its over-dependency on oil. This is a wakeup call for all stakeholders in Nigeria’s upstream petroleum sector to implement the new energy policy on renewable energy for the sustainability of the Nigerian oil and gas industry. The US is one of the largest users of petroleum products in the world and the bulk of its imported crude oil comes from Nigeria.
The new energy policy will lead to a reduction in domestic demand for Nigeria’s crude oil due to the use of bio-fuels and other renewable energy sources. This will inevitably have a detrimental effect on the fossil-fuel sector.
It will also lead to an infusion of funds and modern technologies into the agricultural sector to the neglect of the petroleum sector and other revenue-yielding sectors as more attention will be on the renewable energy sources, especially bio-fuels which are at the centre-stage of the Nigerian new energy policy. Policy-makers are to give priority to the agricultural sector over the petroleum sector in terms of funding and to make available the required technological support. This may stimulate a further decline in the price of crude oil and its allied products in the sector, altering the conventional relationship between supply and demand (i.e., that lower prices lead to increased demand. The lower price would instead be a result of the decline in demand, reflecting the producers’ desire to stimulate demand. In other words, the entire petroleum sector would undergo a huge slump).
Another potential consequence would be a complete overhaul of automotive plants by automobile manufacturers to enable production of vehicles that use 100 percent bio-fuel. Such a complete shift from fossil fuel to renewable energy would render petroleum products a dispensable commodity globally, occasioning retrenchment and down-sizing in the petroleum sector as one consequence of an economic downturn, leading those sectors to reduce overheads, cut staff and take other measures to cut costs.
The authors believe that retrenchment and down-sizing may be inevitable in the sector due to low demand for petroleum products which has occasioned a general decline in oil prices in the energy market. It is our submission that the decline in the price of petroleum products resulting from the implementation of the new energy policy would make crude oil and its allied products less attractive.
We suggest that these factors may reduce the agitation for resource control in the Niger Delta. Therefore, the Nigerian petroleum sector would experience relative peace, and the lives, properties and other oil assets of the multi-national oil and gas companies in the sector would be safeguarded.
Comparison of Legal Frameworks on Renewable Energy
Several countries have enacted legal frameworks on the growth and development of renewable energy and some have provided incentives for using renewable energy as an alternative source of energy: The German Federal Building Code requires local authorities to designate areas for wind project developments. The German Renewable Source Act 2001 for the German wind market is coordinated with the French feed-in-tariff for each kilowatt of power of power produced and priority grid access for renewable energy. China’s Renewable Energy Act 2006 provides for the development and utilisation of renewable energy to guarantee energy security and to preserve the environment. The Act decentralised the renewable energy structure. The Renewable Energy Plan 2005– 2010 in Spain stipulates development of renewable energy through technology to reduce dependency on imports of fossil fuel, to reduce emissions and to promote sustainability of energy. In 2009 in India, the Ministry for New and Renewable Energy guaranteed incentive tariffs for eligible projects for ten years – increments on tax on every metric ton of coal produced or imported to India to encourage the usage of clean energy and to discourage fossil fuel. A Green Bank and Indian Renewable Energy Development Agency was established to encourage the use of clean energy in the country.
As noted, in Nigeria, efforts to diversify from fossil fuel to renewable energy have not been successful due to the absence of a stringent legal framework and lack of commitment on the part of the Federal Government. There is therefore a need to learn from the range of legal and policy measures adopted by the selected countries in developing and promoting stable electricity in Nigeria.
Findings
Nigeria’s legal framework for the use and development of renewable energy is incoherent and inadequate to meet the social, economic and environmental development needs of the country. The extant legal framework for renewable energy is narrow in scope. The Federal Government must do more to overcome all the challenges associated with the formulation of a coherent legal regime on renewable energy in Nigeria.
Recommendations
In the light of our findings, our recommendations are as follows.
There is a need for a legal regime that is favourable to growth, and execution of the new energy policy should be enacted promptly. The Federal Government of Nigeria should be committed to the new energy policy to help cushion the effect of the policy on the country through the petroleum sector, as Nigeria’s foreign exchange earnings depend heavily on crude oil. The country should develop more sources of revenue to the Federal Government through renewable energy. Fossil fuel energy is detrimental to the environment being the major cause of GHGs, while renewable sources of energy are environmentally friendly by reducing pollution. They can enhance electricity supply and are sustainable.
Nigeria can subdue all obstacles to renewable energy by integrating renewable energy into our energy system by making the use of renewable energy a matter of national priority to meet electricity demands with supplies. There is the need for political will and unalloyed commitment for sustainability of renewable energy systems and markets in Nigeria. Commercialisation of renewable energy in Nigeria requires the establishment of energy markets for rural populations. To nurture them, there is a need to increase investments in renewable energy development in the country, and to improve services and training in the use of renewable energy technologies.
The success of these efforts will also depend upon its social acceptability. There is the need for aggressive enlightenment of Nigerians on the new energy policy and for a large-scale marketing campaign for full acceptability of the policy by Nigerians. It will also be important to improve service and maintenance arrangements for renewable energy technologies. Rural users need to be provided with adequate repair and preventive maintenance services as well as training in basic operational skills such as correct appliance connections and battery usage, as well as in routine maintenance procedures such as filling batteries with water and cleaning wind-turbine blades. User training should also include load control skills that can help end-users manage their daily energy uses efficiently and can reduce the need for large storage requirements in renewable energy systems in Nigeria.
Conclusion
The study underscores the importance of renewable energy to guarantee sustainable electricity in Nigeria with emphasis on the need to enact a legal and policy framework to promote energy sufficiency and security through renewable energy. In view of the erratic supply of electricity in Nigeria and the near non-existence of power supply in the rural areas, the need for alternative energy sources cannot be neglected. For example, wind turbine technology plays a vital role in contributing to the search as an alternative source of energy in the country.
The above discussion has highlighted various significant gaps in the existing legal framework on renewable energy policies in Nigeria, as well as justifications for a new legal framework on renewable energy use and developments. Many countries have already adopted new energy policies which advocate a radical and drastic departure from fossil fuel to renewable energy. Within the next 20 years, it is expected that a greater percentage of the world’s energy will come from renewable energy sources. The lack of a new energy policy that incorporates a response to these expectations would negatively impact the Nigerian petroleum sector. Thus, the fundamental question remains: What is next for Nigeria’s energy policy? The authors recommend prompt passage of the Petroleum Industry Governance Bill by the National Assembly to facilitate the implementation of the policy. Moreover, there is little or no public awareness of the new energy programme, and this deficit may hinder the implementation of the new energy policy if not addressed speedily. The Federal Government must adopt a “how to make it work” approach. It needs to harness renewable energy sources to attract foreign investors by harmonising all existing legal frameworks and policies to strengthen governance and reform regulatory institutions to make enforcement of a renewable energy policy a national priority in Nigeria.
Footnotes
Acknowledgments
The financial support by Covenant University, Ota, Nigeria is gratefully acknowledged.
Copyright for this article is retained by the authors, with first publication rights granted to the journal.