In May, Nigeria’s historic crude oil refinery, Dangote Refinery, was inaugurated by former President Muhammadu Buhari in a ceremony that became a cynosure of both African and international political eyes.
The headline message was that Dangote Refinery can meet the entirety of Nigeria’s domestic requirements and still have excess for export to other countries. The refinery boasts of the capacity to produce 53 million litres of gasoline per day; 34 million litres of diesel per day; 10 million litres of kerosene per day, and 2 million litres of aviation jet1 fuel per day.
It is deserving to say that the newly built multi-billion-naira refinery will help Nigeria boost foreign crude reserves, generate electricity, and provide thousands of jobs for Nigerians. However, equally deserving of note are the valid, pressing and unignorable concerns about how the refinery will undermine Nigeria’s rather ambitious commitment to net-zero emissions by 2060.
Globally, oil refineries contribute about 4% of carbon emissions while Nigeria’s oil and gas sector represents about 11% of in-scope emissions, which are attributable to fugitives, upstream energy consumption (fuel use), venting and gas flaring, according to the ETP. It is highly likely that the full operation of the refinery would increase Nigeria’s greenhouse gas emissions and could pose more problems for a climate-embattled country such as ours. Climate Action Tracker (CAT) has posited that Nigeria’s energy sector plans, including the plan to expand oil and gas production, are in conflict with the Paris Agreement.
For an oil dependent but climate vulnerable country like Nigeria, developing climate change goals while also trying to grow the economy is a delicate but pertinent task. This calls for thorough analysis and evidence-based policy and action. Given our commitment to reducing our emissions as communicated in the country’s Nationally Determined Contribution (NDC), and the Net-Zero Pledge, and the Long-Term Low Emission Development Strategy (LT-LEDS) it is vital that we are cognisant and clear about the climate change impact of the new refinery.
Some preliminary calculations indicate that the Dangote Refinery in a BAU scenario could result in up to 160 percent increase in Nigeria’s emissions by 2060 but without a functional national emissions Measurement, Reporting and Verification (MRV) it is hard to be precise about the figures.
There is a need to demonstrate that we are serious about meeting our pledges and commitments by urgently establishing on a robust national GHG emission inventory which can be dynamically updated to reflect changes in the country’s stocks and flows.
So far there has been a lack of coherence in the climate change policy development of the country and a limited appetite to seriously consider the GFH emissions implications of key national development policies and investments. A typical example of a policy that leans largely towards oil exploration and disregards climate change and the Paris Agreement is the Petroleum Industry Act (PIA) passed in August 2021.
While the act has some laudable objectives it makes no mention or provision for climate action such as positing that tax receipts from extra oil exploration would be used to develop the country’s renewable energy capacity. Instead, Section 9(5) of the PIA 2021 stipulates that NNPC Limited shall transfer the 30 percent of profit oil and profit gas to the frontier exploration fund escrow account dedicated for the development of frontier acreages only. This is antithetical to our energy transition objectives especially when the world is fervently moving away from fossilised fuels to cleaner energy sources.
President Bola Tinubu’s administration would be well advised to take the impact of climate change seriously in pursuing its ambition to boost the country’s economic growth. It may be tempting for a government that has stimulating economic growth as one of its top priorities to ignore or lay lip service to climate change with the presumption that we will develop now and clean up later or that climate change is a white man’s problem. But such an approach will be a major mistake given that climate change is already costing the country billions in dollars through increased frequency and intensity of extreme weather events, and multidimensional negative impact to human and natural systems.
Nigeria needs to strike a perfect balance between increment in oil exploration and development of renewable energy capacity in the long term. The government needs to tell us how they plan on handling the emissions that the refinery will give out. There’s been a lot of inconsequential chatter, talk shops, conferences, but little to no clear-cut actions on pursuing Nigeria’s economic growth while still focusing on climate action. Currently, both targets and processes aren’t meeting a singular point of creating a sustainable economy. We need to change that narrative.
Under the ETP, Nigeria aims to end gas flaring by 2030, a target that has been missed seven times since 1979. Gas flaring has been linked to many health problems and communities in oil and gas producing regions like the Niger Delta. There are over 178 flare sites in Nigeria, which emit harmful chemicals that make people sick and damage the farming and fishing industries. NOSDRA, a government-run satellite tracker, said that 1.8 billion standard cubic feet (scf) per day of gas was flared in the last nine years, one that should ordinarily attract about $3.6 billion in penalty, little of which was paid. Although there is some renewed hope with the 2030 set agenda to end gas flaring, it is highly likely that we may not meet up with the deadline considering past antecedence.
Economic growth has been touted as the biggest reason for Nigeria to increase its poor refining capacity, gas exploration and fossil fuel development, however, this could potentially put us at great risk of stranded assets. Stranded assets are basically assets that lose value or turn into liabilities before the end of their expected economic life. In the context of fossil fuels, this means those that will not be burned, they remain stranded in the ground. Billions of dollars in capital could be lost for Nigeria if we don’t consider that we could be vulnerable to stranded assets.
The International Energy Agency (IEA), in 2021, warned that exploitation and development of new oil and gas fields need to stop, and no new coal-fired power stations can be built if the world is to stay within safe limits of global heating and meet the goal of net zero emissions by 2050. Moreover, about half the world’s fossil fuel assets could be worthless by 2036 as the world moves towards net-zero emissions, according to a study from the University of Exeter.
The study revealed that producing more oil and gas than required could leave $11trillion to $14 trillion in stranded assets. It added that countries that are slow to adopt cleaner energy will suffer, but those that do will benefit. A fall in the value of fossil fuel assets can have several consequential effects for African countries.
The impact of climate change is not an approaching dilemma, but one that’s already destabilising the country. Thus, this calls upon us to not dilly-dally as we are wont to and spring into action. Nigeria loses about N15 trillion yearly to the impact of climate change and may skyrocket to N69 trillion by 2050. Across the six geographical zones, we can see flooding, rising sea temperature levels, erratic rainfalls, food insecurity, irregular hot and cool weather among others.
Last year, the National Emergency Management Agency (NEMA) said that 662 persons lost their lives, 3,174 suffered injuries and over 2 million people were displaced by the 2022 flood disaster. Flooding has worsened Nigeria’s food crisis. It degraded the environment and destroyed crops, farm settlements, livestock, and seedling stores. Some climate modelling work has shown that there could be a loss of up to 50 per cent production of these staple foods by 2050 due to climate change.
In addition, desertification in the Sahel region accounts for approximately 580,841km2 of Nigeria’s landmass, accounting for up to 63.8% of the country’s landmass. About 30 million Nigerians are affected and impacted by desertification. Desertification continues to spread towards the southern parts of Nigeria at a rate of 0.6km per annum. This has caused forced human migrations, increased erosion, alteration of geochemical composition of soils, surface and groundwater depletion, biodiversity loss and species extinction, reduced agricultural yields, higher unemployment and rural poverty rates, as well as a rise in social vices and civil conflicts.
Nigeria surely needs a robust plan B to balance the long-term goal of net zero and short-term goal of exploring fossil fuel in the country. This requires adequate support in terms of finance and hard equipment for our energy transition. Our climate finance can be significantly changed with support from developed countries to align with the global climate policy as well.
Lack of finance remains a huge bump in the road for our ETP, hence global collaboration will help speed up the building of our renewable energy capacity. Pollution is one part of the country and pollution is other parts of the country, after all. The entire world is buckling under the weight of climate change, so no country is spared. Hence, the onus is on those developed countries to rightly furnish us with the needed tools based on our outlined strategies and policies to diversify our energy.
Coming back home it is obvious that there is, unfortunately, a huge and growing gap between the rhetoric from the Nigerian government over the years and the reality on ground. This gap needs to be closed with practical, cohesive and well-articulated policies and implementation strategies to drive us towards achieving our net zero emissions target by 2060, effectively reducing our reliance on fossil fuel.
Ultimately, the Dangote refinery, a critical mark in Nigeria’s crude oil dependence, should become a launch pad for us to research and invest heavily in more ways we can wean ourselves and our future off fossil fuel in the medium term with the aim of charting the course towards the net zero emissions target.
By Professor Chukwumerije Okereke, Director, Centre for Climate Change and Development at Alex Ekwueme Federal University Ndufu-Alike, and Visiting Professor at Universities of Reading and Oxford, United Kingdom
