ENERGY TRANSITION: Why Akwa Ibom State must be ready

Everyday, the clock ticks, drawing near the next reality. Energy Transition!

Just as the world gears in preparation towards sustainable energy (Green Energy) by 2060 timeline, it portends nothing will exempt Continents, Nations and Sub-nationals from the effect of this global change.

Energy Transition (ET) according to Wikipedia is a significant structural change in an energy system regarding supply and consumption. Currently, a transition to sustainable energy (mostly renewable energy) is underway to limit climate change. It is also called renewable energy transition. The current transition is driven by a recognition that global greenhouse-gas emissions must be drastically reduced. This process involves phasing-down fossil fuels and re-developing whole systems to operate on low carbon electricity.

Also, Mfon Gabriel, the Executive Director, Well of Science Foundation – Nigeria says ET is “the global energy sector’s shift from fossil-based systems of energy production and consumption — including oil, natural gas and coal — to renewable energy sources like wind and solar, as well as lithium-ion batteries.”

He also said that “Energy Transition (ET) for Nigeria means, diversification. For development partners, it largely involves de-fossilization of energy.”

Fossil fuel is notably the major source of green house gas emissions which affects the environment and cause a lot of hazards as the ozone layer depletes.

Currently, Nigeria’s challenge is to leverage upon the fossil availability and diversify into the renewable pathway.

Energy Transition has been a focal point of global discussions seeking escape from the nearest impending doom according to environmental researchers.

One of such major discourse was the recent 2023 United Nations Climate Change Conference or Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC) more commonly known as COP28 which took place at Expo City, Dubai, United Arab Emirates on 30 November to 12 December 2023.

While the Conference was ongoing in Dubai, a ripple was sent to Akwa Ibom State, the Subnational of Nigeria, as a group of Journalists were gathered on a one day workshop facilitated by the Dune Newspaper courtesy of Natural Resource Governance Institute (NRGI) and BudgIT to brainstorm on the wellbeing of Akwa Ibom State in the face of this global trend.

In his opening remarks, the Editor of the Dune Newspaper, Mr. Abasifreke Effiong said the training was necessary as a step-down approach of the previous training he received on Energy Transition organised by Natural Resource Governance Institute and BudgIT for host communities’ stakeholders in Akwa Ibom State. He added that it is to close the huge knowledge gap on Energy Transition which outcome will directly affect the State whose major source of revenue depends on crude oil production.

According to the Paper, ‘Energy Transition: Setting Agenda for a Clean Economy at Sub-National Level’, presented by Mr. Mfon Gabriel, Executive Director, Well of Science Foundation – Nigeria, ex-rayed the unpreparedness reality of Akwa Ibom State as one of the oil producing States in the Niger Delta Region.

He noted that while the State seems not to align with the global trend in its policy formulation, a lot of factors will rock the economic boat of the Akwa Ibom as an oil producing State in the face of this surging reality.

As the State largely depends on crude, the decline of its value in the world market will have a negative impact on the financial buoyancy of the State as one of the oil giants.

“Akwa Ibom State’s economy is the 8th largest in Nigeria, dominated by Oil & gas and cash crop production which jointly account for 90% of its Gross State Product (GSP). One of the major industrial crops in the State is the oil palm tree that can be seen in all the 31 Local Government Areas of the State. Akwa Ibom State is reputed to have the highest number of Oil Palm Trees per capita in Nigeria. The State is endowed with various mineral resources such as petroleum and is referred to as the largest producer of petroleum in Nigeria. Other mineral resources available for commercial exploration and exploitation within the State include Natural gas, Limestone, Salt, Clay, Coal, Silver Nitrate and glass sand. Akwa Ibom State is notably one of the nine (9) Oil producing States in Nigeria and it has also proven to have deposits of gold and silver nitrate which are precious metals useful in the production of jewellery.

“2021, 13% Derivation was N91.15bn; 2021 Recurrent Revenue – N185.85bn; 13% Derivation as a percentage of recurrent revenue – 49.04%. Can 13% Derivation pay personnel cost and Overhead Cost of government? Overhead Cost = N52.87bn Personnel Cost = N54.58bn. It could pay in the present context, but imagine a continuous fall in the demand of crude of oil at the international market,” Mfon Gabriel emphasized.

Nigeria as one of the countries that signed the Conference of Parties Agreement in 2017 COP26, reaffirmed its commitment to the same agreement and adopted climate change policies with a target to go carbon-neutral by 2060. Nigeria, a part of the nationally determined contributor to the COP21 2015 Paris Agreement, committed to cutting its carbon emissions unconditionally by 20% or conditionally by 45% with international support by 2030. Nigeria further committed to include clean cooking as part of its contribution in 2021.

Also, Nigeria nevertheless proposed an Energy Transition Plan (ETP), launched in 2022, as its pathway to a carbon-neutral future, with gas featured prominently as a transition fuel and to achieve its net-zero target by 2060 while meeting the nation’s energy needs. The problem is that the countries with the resources have decided that they are no longer financing new, never-ending fossil-fuel projects. Nigeria’s crude production is increasingly falling and revenue reducing.

To further implicate Akwa Ibom State Government, the Federal Government went ahead to set up an Energy Transition Implementation Working Group (ETWG) with former Vice President, Prof Yemi Osinbanjo as the Chairman with a dedicated secretariat, the Nigeria Energy Transition Office (ETO).

The targets for the ETWG is to Secure at least $10 billion financing commitment to kick start the implementation of Nigeria’s Energy Transition Plan by COP27; Secure 3-5 agreements with Original Equipment Manufacturers (OEMs) to begin the local manufacturing/assembly of key technologies such as electric vehicles, and decentralized solar systems in Nigeria by 2025.

There are already enabling policies and initiatives at the Federal level without the State replicating it.

The Federal Government of Nigeria (FGN) passed the Climate Change Bill in 2021 with provisions for the establishment of a climate change council and a carbon market. It submitted an ambitious Energy Compact to the United Nations (UN) as part of the United Nations High Level Dialogue on Energy. It also submitted its updated Nationally Determined Contributions, NDCs, in COP2021. The Federal Ministry of Environment is harmonizing Nigeria’s NDCs with its energy transition pathway and other climate change efforts.

What this means for Akwa Ibom is that it must align with the trend in the energy sector which the Federal Government has already keyed into.

Currently, nothing seems to prepare the State for this transition.

“Akwa Ibom State Government is not prepared for the energy transition. Its MTEF and the Umo Eno Arise Agenda doesn’t speak to Energy Transition. There is no fiscal document in Akwa Ibom State that aligns itself with Nigeria’s Energy Transition Plan. Akwa Ibom State Government is not aligning itself to climate change decisions across the world inspite having representatives in previous COPs,” Mfon Gabriel said.

It is necessary for the State to be proactive in this global transition plan through the review of its policies and programmes.

Akwa Ibom State Government should develop a strong, stable government policy speaking to SDG 7 (Affordable and Clean Energy), SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action) Localize the Nigeria Energy Transition Plan for Akwa Ibom State. It should invest in Research and Development on clean and renewable energy. Provide scholarship programmes to train and educate our citizens on the energy of the future from specialized institutions of the world. Develop a strategy to become a leader in a part/the whole of the supply/value chain of clean and renewable energy. Seek for partnership from donors and renewable energy manufacturers to fund, invest and operate in the State. Host Community Development Trusts in Akwa Ibom State, their CDP should reflect and invest in green and renewable energy.

Also, the State needs to establish Green Energy Free Zone in place of Oil and Gas Free Zone in the State, like Masdar City Free Zone in UAE. Demand for Natural Gas elimination and Monitization Plan from NUPRC and Oil and Gas Companies operating in the State, and charge the Ministry of Environment and Petroleum see to its implementation in the State for the reduction of gas flaring. State Government rural electrification project to go green and clean, that way we create and model that will attract more funding into the State.

Tengi George-Ikoli, Senior Officer and Focal Person for the Natural Resource Governance Institute (NRGI) said “the transition away from fossil fuel to renewable energy resources will have significant impacts on the lives and livelihoods of oil revenue dependent states.

“The economic, environmental and social impacts of the transition will be most significantly felt by oil producing states that do not reflect on the ongoing national energy transition plans and design responses that address those impacts.

“The energy transition will affect oil revenues, threatening income from FAAC allocations, 13% derivation funds and other oil related income streams such as the Niger Delta Development Commission and Nigerian Content Monitoring and Development Board.

“Additionally, if not properly prepared for, the legacy environmental degradation left behind by international oil companies divesting their fossil fuel interests and shifting to renewables will have a profound impact on oil producing states for generations to come. Akwa Ibom reliance on FAAC was around 82% in 2020, so it is therefore important for state governments to explore alternative sources of revenues beyond the oil revenue sources and hold the federal government to account to remediate their environments.”

He added that the state governments must also plan for the inevitable future where oil revenues are depleted thus, making budgets un-implementable. It is also important to note that as oil becomes less competitive globally, the national interest may shift and that could leave Akwa Ibom with minimal beneficiation, environmental degradation and impoverished citizens.

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Meanwhile, the communiqué reached at the end of the workshop called on the “Akwa Ibom State Government to domesticate the National Energy Transition plan and strive to achieve SDGs 7 (Affordable and Clean Energy), 11 (Sustainable Cities and Communities) and 13 (Climate Action); Demand the Federal Government and IOCs to carry out comprehensive environmental audit, remediation, clean up and restoration of host communities ahead of the 2060 energy transition timeline. The State should interrogate decommissioning and abandonment plan for stranded oil assets in its communities; Reduce fossil fuel-based power projects; invest in research and home-grown innovations on clean energy, training and capacity building for youth and women on large-scale renewable energy (solar, hydro and wind) projects, and environmental management; prioritising investments in sustainable agriculture, maritime and solid minerals; Commit to savings in the Reserve Fund; Seek partnership with donor agencies, renewable energy manufacturers, Nigerian Content Development and Monitoring Board (NCDMB) and Niger Delta Development Commission (NDDC) to train youths and women, invest and fund clean energy projects.

Also contained in the Communique was that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) should immediately commit fines for gas flaring in host communities in Akwa Ibom State to the environmental remediation of those communities; and the Management of Host Communities Development Trusts to invest in green and renewable energy projects.

High point of the workshop was the inauguration of Media Advocacy Group on Energy Transition (MAGET) – Akwa Ibom State, to encourage journalists to be committed in reporting energy transition, spotlighting research findings on home-grown solutions on improving accessibility and affordability of clean energy. To also create more awareness on energy transition and support all State Government’s initiatives aimed at raising revenue in the non-oil sectors.

Present on the occasion were the Honourable Commissioner for Information and Strategy, Akwa Ibom State, Mr. Ini Ememobong; Chairman of Nigeria Union of Journalists, Akwa Ibom Chapter, Comrade Amos Etuk; Princess Victoria Umoh of Women’s Climate Assembly; and Mr. Ibanga Godswill from Clement Isong Foundation.