Navigating Nigeria’s Energy Transition: A New Chapter After the End of Subsidies -By Daniel Fasheun (Ph.D.)

The past six months in Nigeria have been marked by political and economic instability, triggered by a controversial election that was marred by irregularities. The impact of those three words, “subsidy is gone”, during the swearing-in of the new government, originally not part of the president’s speech, sent shockwaves across the nation, affecting the lives of millions of Nigerians negatively. Now, with the official end of subsidies, the situation calls for an urgent and radical change.

The abrupt end of subsidies caused the pump price of gasoline to skyrocket by 200% overnight, and then by another 15% in a matter of weeks. This, in addition to the floating of the country’s currency (Naira), has imposed a severe financial burden on households, making basic necessities increasingly inaccessible. Meanwhile, household income has remained stagnant, leaving many families unable to cope with the rapid changes.

However, amidst these challenges lies an opportunity for Nigeria to chart a new course towards energy independence and sustainability. Looking back, it is regrettable to see missed opportunities that could have helped us navigate these difficult times. For instance, a policy document for biofuels was drafted back in 2007, with an initial plan to introduce imported fuel ethanol to achieve a 10% fuel ethanol to gasoline blend (E-10) in some selected cities within the first three years and have a national roll-out of the fuel blend in five to ten years in the first phase of implementation. Unfortunately, it is now more than 15 years later with little or no progress made on the implementation of this policy document.

In addition, the Autogas policy launched in December 2020 in Nigeria had ambitious goals of converting a million vehicles from gasoline to natural gas. Its primary aim was to reduce the heavy reliance on gasoline and promote gas as a cleaner and more cost-effective energy source for passenger and haulage vehicles. However, despite being a potential game-changer, the policy faced numerous hurdles that hampered its success. Had this initiative been successful, it could have mitigated the impact of the current gasoline subsidy removal and paved the way for a more sustainable transport sector.

It is clear that we can learn valuable lessons from other countries that have successfully embraced biofuels. For example, Brazil’s experience with biofuel production has led to impressive results. Brazil’s flex fuel technology, introduced in 2003 to allow consumers to run their vehicles on any blend of gasoline and hydrous ethanol (E100) has reduced their reliance on imported fuel and reduced CO2 emissions from transport. As of 2021, Brazil had achieved a high level of energy independence in its transport sector, with biofuels representing 25% of its transport fuels, and by implementing its National Biofuels Policy (RenovaBio), the nation has pushed further its commitments under the Paris Agreement to significantly reduce its greenhouse gas emissions.

Similarly, countries like Sweden and Denmark have made significant strides by incorporating biomethane into their transportation systems, having supplying shares of 95% and 100%, respectively, at their compressed natural gas stations as of 2020. This transition has contributed to a substantial reduction in conventional fossil fuel consumption and a marked decrease in carbon emissions.

Nigeria, blessed with abundant resources, has the potential to replicate these successes. Natural gas, bioethanol, and biomethane can offer cost-effective and eco-friendly fuel alternatives, reducing our vulnerability to fuel price fluctuations. By tapping into these resources, we can work towards energy independence, reduce our reliance on imported fuel, and create a more stable and sustainable future for our nation.

However, achieving this vision requires a collective effort. Strong political will and effective policy implementation are vital components of a successful energy transition. By drawing inspiration from global leaders and having strong collaboration between the government, private sector, and civil society, we can pave the way for a more prosperous and sustainable Nigeria.

As a Nigerian, I stand in solidarity with my homeland and firmly believe that with unity and determination, we can turn this crisis into an opportunity for lasting change. Let us come together, learn from the past, and shape a brighter and greener future for Nigeria — one that ensures economic resilience and environmental stewardship for generations to come, even as the ‘subsidy is gone’.

References
1.https://www.bbc.com/news/world-africa-65765585
2.https://www.bloomberg.com/news/articles/2023-07-18/nigeria-raises-gasoline-prices-15-adding-more-pain-at-the-pump
3.http://www.ecowrex.org/system/files/repository/2007_biofuels_policy.pdf
4.https://businessday.ng/energy/oilandgas/article/gas-powered-vehicles-now-cost-effective-as-fuel-subsidy-ends/
5.https://www.ieabioenergy.com/wp-content/uploads/2021/11/CountryReport2021_Brazil_final.pdf
6.https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Implementation%20of%20RenovaBio%20-%20Brazil%27s%20National%20Biofuels%20Policy_Sao%20Paulo%20ATO_Brazil_02-25-2021
7.https://en.wikipedia.org/wiki/Flexible-fuel_vehicles_in_Brazil
8.https://www.ngva.eu/medias/2510-biocng-in-2020-new-data-proves-rapid-growth-of-biomethane-in-transport/