Is Nigeria Returning to Coal Mining?

Nigeria symbolized its commitment to limiting global warming by launching its thirty-seven-year Energy Transition Plan (ETP). The World Bank estimates that about ninety-one million Nigerians still don’t have access to electricity, indicating Nigeria’s energy poverty. As a result, the President announced a return to coal mining to close energy access gaps; however, this response is insufficient for climate change mitigation. The Bureau of Public Enterprises (BPE) announced the investor call for public bids on the following five blocks in Enugu State:

1. Amasiodo Coal Block;
2. Onyeama Coal Block;
3. Okpara Coal Block;
4. Inyi Coal Block; and
5. AgwasiAzagba Coal Block.

Why is Nigeria Returning to Coal Mining?

One may interpret Nigeria’s return to coal mining as a sign of a liquidity crisis. The World Bank Poverty Outlook for Nigeria revealed that only 3.7% of the nation’s revenue was unused to service debts. As of June 2023, Nigeria’s inflation records at 22.2%, outpacing wage growth. With these economic indicators, the government does not have the money to fund renewable energy projects to improve electricity access. However, operationalizing coal mining activities is counterproductive to attracting prospective investments to support the ETP’s $410 billion objectives. In the World Energy Transitions Outlook 2023 June editorial, the International Renewable Energy Agency (IRENA) analysis indicated a continuous plummet in investments in Nigeria and other African countries. The IRENA further predicts access to financing to become more constrained due to the unfavourable risk-return profiles of African countries. Nigeria should dredge people-centred approaches such as Just Energy Transition Partnerships (JETPs) to achieve near-zero emissions and bridge the energy access gap.

People-Centred Approaches: why JETPs?

Just Energy Transition Partnerships is a financing mechanism that combines climate mitigation with energy access. It incorporates blended financing that addresses socioeconomic consequences, enabling Nigeria to achieve low-cost energy access, economic empowerment and industry competitiveness. The objective of a JETP is to allow wealthier nations to fund coal-dependent countries’ transition towards clean energy according to the receiving country’s transition plan. Focusing on increasing house income reduces the dependence on fossil fuels such as charcoal and firewood is preferable to mainstreaming charcoal use to increase energy access. The elasticity between household income and fossil fuels used is apparent. International organizations such as Sustainable Energy For All (SE4All) have endorsed the adoption of JETPs as a technological solution to clean energy transition.

On the other hand, JETPs have not been wholly welcomed. Industry experts have objected to its full-scale adoption, concluding JETPs to be narrow. Critics opine that transition designs must be heterogenetic to reflect the diversity of countries’ energy demands, oil and gas dependence and its contribution to GDP, energy level and type of energy needs. Also, the minimal footprint of Africa’s emissions has been emphasized as justification for new fossil fuel energy investments. However, regard must be given to Africa’s minimal past emissions because of its lack of industrialization. The global North has been the most significant emitter because of its heavy fossil-fueled industrial activities. For example, China and the U.S. China is rated the largest emitter of coal-generated carbon, with 10,668 million metric tons emitted in 2020; whilst the U.S. is the primary producer of crude oil. So, if African industries rely on coal and gas for energy generation, Africa’s footprint will inadvertently increase, which is ecologically harmful.

Foreign investors have signalled intentions to withdraw support for fossil-reliant projects. While seeking $10 billion annually to fund its ETP, mainstreaming coal use is an investor deterrent and an impediment. Thus, it may leave Nigeria with stranded assets.