“Nigeria, alongside other countries …, shall continue to implement her commitment under the Paris Climate Agreement,” Dr. Clement Adaku said, for the Ministry of Foreign Affairs. Based on his full statement, Nigeria joined a robust network of countries, cities and companies, which rebuked Trump’s decision to remove America from an agreement the world rushed to join with unprecedented speed. Trump’s critics, standing on folders of research, confronted the decision, and liberal media headlines reached an iconic conclusion: “The US resigned as leader of the free world.” From the White House Rose Garden, Trump pushed back with unsurprising “America First” arguments. He faulted the Paris Agreement’s financial burdens, incremental compliance gains, affected jobs, household energy costs, and inequitable competition with China and India.”
Putting aside a painful cycle of mismatched arguments on both sides, a tide is now surging to capture promising shares in the renewable energy market. The economic case for going green now operates in tandem with a moral obligation to “make our planet great again,” as Macron said. Buhari accelerated the process for Nigeria to join the Paris Agreement by signing the pact during the UN General Assembly week in September 2016, and completed the process by signing the instrument of ratification in May 2017. That’s the legal basis for the “commitment” Dr. Adaku spoke about. However, as with any law, enforcement is worth its weight in gold. Beyond declarations, Nigeria needs a smart roadmap to capitalize on its membership of the Paris Agreement, and benefit from prioritizing a green agenda. Here are some roadmap signposts to guide our sprint:
Carving space in the promised land
A carbon neutral future is the new promised land. For the 193 countries committed to the Paris Agreement, there is no going back. Trump now effectively joins a small club of non-signatories: war-torn Syria and Nicaragua. (Nicaragua did not adopt the agreement because she felt it did not go far enough to protect the climate). At the start of the Paris meeting, technology and innovation were placed at the centre of the solution to the climate change challenge. They represent a new economic frontier. Where does Nigeria come in? The International Energy Agency projects that $13.5trillion investments for technology and innovation will be needed to achieve the climate pledges. Non-OECD countries like Nigeria stand to absorb a $2.7trillion share of investments in low-carbon technologies. Private sector will play a role to invest in technological innovations, but will need incentives, reassurance, and underwriting, before committing capital into the perceived uncertainties surrounding renewables. By working across sectors to develop eligible proposals, Nigeria can attract development finance agencies that provide “blended financing” for sustainable infrastructure projects. Potential agencies include the International Finance Corporation, the Clean Technology Fund and Green Climate Fund. How else can we raise funds to invest in these technological innovations?
Some local decisions are already positioning us favourably in the climate race. Last year, in the wake of the Paris Agreement, the Nigerian government announced plans to issue a green bond. This revenue generating instrument will be the first sovereign green bond issued by an African nation. Some key stakeholders involved include the CBN, NSE, Ministry of Finance and Ministry of Environment as well as the UNEP Inquiry and Climate Bonds Initiative. How will this help? The funds expected from the issuance of debt capital are currently being earmarked for initiatives to accelerate Nigeria’s environmental (and economic) progress. About N12billion will help to fund the replanting of forests that support local livelihoods; solar power installations in local communities; and off-grid power plants for schools and hospitals. Government ministries will oversee these projects, and will benefit from tangible returns: taxable service rates, agricultural jobs and positive spill-overs from increased energy supply. Why stop there? Our government doesn’t have a monopoly on bonds. Private companies can also issue bonds to finance green initiatives that advance their own long-term profits, social licence, and host country. To put their money where their tweets are: corporations in Nigeria (including multinationals like Exxon Mobil, Shell and GE who all condemned Trump’s decision) should also issue bonds for local, greening initiatives.
India is the third-largest importer of crude oil, and one of our main export destinations for crude oil. Recently, they announced that by 2030, every car sold within their borders will be electronic. Currently, oil imports cost India $150billion each year, so this switch is calculated to save the country $60billion in energy costs by 2030. Logically, this will reduce India’s demand for crude oil, including from Nigeria. We don’t need to wait until every country that currently welcomes Bonny light oil makes similar adjustments to their energy matrix. Let’s change how we rely on oil both abroad and at home. Energy efficiency reforms in the transport sector are part of the “Bridge Strategy” measures the IEA recommend oil-dependent countries follow to exceed Paris targets with today’s technology – while maintaining economic growth.
History Repeating Itself
Trump’s withdrawal can only take effect after America’s 2020 election. The die is not cast. While John D. Rockefeller provided light across American homes with kerosene to power lamps, Nikola Tesla and his financier, George Westinghouse, struggled to prove electricity was a viable form of alternative energy. Tesla’s successful demonstration of his signature alternating-current (AC) energy at the Chicago World Fair in 1893 provoked J.P. Morgan to bold action. Morgan took full financial control of Thomas Edison’s company to create General Electric, and then spread Tesla’s signature AC electricity across America. His wallet thanked him later. A similar era – heralding the new future of energy – is upon us. That future is lucrative, delicate and competitive all at once. It will belong to players who join today’s race to make our planet great again.