Nigeria’s E-Mobility Ambitions: COP28 and Bridging the Gap with Climate Finance -By Abiodun Salako

The world is undoubtedly facing a crisis and 2023 was unfortunately dubbed the hottest in 174 years of record-keeping where humans directly measured the temperature of the planet. Hence, climate mitigation was a vital component of the conversations at COP28, leading the rather groundbreaking Global Stocktake (GST) text to call on countries to “accelerate emissions reductions from road transport through a range of pathways, including development of infrastructure and rapid deployment of zero and low emission vehicles.”

Electric vehicles (EVs) are a significant part of meeting global goals on climate change. They feature majorly in mitigation pathways that limit warming to well-below 2C or 1.5C, which is in agreement with the Paris Agreement’s targets. The e-mobility drive globally has been increasing with China boasting one of the fastest growing EV markets in the world. Recent years have seen exponential growth in sales of electric vehicles (EVs) together with greater range, wider model availability and improved performance. Research by Canalys showed that worldwide sales of electric vehicles (EVs) grew by 49% to 6.2 million units in H1 2023. EVs also constituted 16% of the global light vehicle market, a notable increase of 12.4% from the first half of 2022. 

As a developing country, Nigeria has been making moves to push for electric vehicles (EVs) in the country. At COP28, President Bola Tinubu announced plans to deploy 100 electric buses for carbon reduction and modernisation of the transportation system in Nigeria. It was a welcome development with the potential to draw in foreign investment into the country’s e-mobility sector and an expansion of that initiative can make the public transport sector key in driving EVs adoption in Nigeria as is seen in Kenya.

Perhaps more ambitious — necessarily so — is Nigeria’s Energy Transition Plan (ETP) which targets 10% biofuel blends by 2030 and complete EV adoption by 2060. Many experts have posited that the removal of fuel subsidies may just boost the electric mobility sector as government and private sector partners may expend more potency to promote EVs and charging infrastructure for a sustainable future. But how much resources would be pumped into the sector and how fast it would grow remains uncertain.

The Nigerian e-mobility sector is quite essential owing to the amount of CO² emissions from fuel combustion since 1971.

From 1971 to 2014, the transportation sector’s average yearly contribution to the country’s total CO² emissions from fuel combustion was 48%. The government projected that by 2035, greenhouse gas (GHG) emissions from the transport sector could increase by up to 50%, and by almost 100% by 2050; under the business as usual (BAU) scenario.

Hence, transitioning to e-mobility is pertinent in decarbonizing the transport sector in Nigeria. Accelerating the adoption of electric buses, two-wheelers, three-wheelers and cars requires substantial financial and technical resources, especially in developing countries. And here lies the problem for Nigeria’s green transport future.

Although the government is making efforts to support this transition, which includes boosting local assembly capacity for electric vehicles and enabling some level of private sector participation, it is not yet enough. Let’s circle back to the ETP where it’s projected that $1.9 trillion is required to get to Net Zero by 2060, including $410 billion above projected usual spending. This translates to about $10 billion annually. As of February 2023, the government said it had secured $3.6 billion from its $10 billion yearly financial requirement to achieve energy transition. That’s a poor amount for Nigeria’s transition plan. None of our 2030 targets look strongly set on track.

For Nigeria, climate finance and e-mobility are not standalone entities; they are intertwined threads in the country’s sustainable future. International funds, grants, and investments pooled together from initiatives jointly or separately birthed by developed countries that are signatories to the Conference of the Parties (COP) can help address financial constraints and provide the necessary resources for building charging infrastructure, promoting research and development, and implementing supportive policies.

The required funding for climate adaptation and mitigation to achieve goals by 2050 is estimated in the trillions of US dollars yearly. Presently, the world is only reaching approximately $630 billion annually in climate finance, with a small portion allocated to developing nations, according to the International Monetary Fund (IMF). This is concerning as emerging and developing economies require substantial climate finance. Consequently, it’s crucial for advanced economies to fulfill and surpass the commitment of providing $100 billion yearly in climate finance for developing nations.

However, the GST text urged developed country parties to fully deliver on the $100 billion per year goal urgently and through 2025. Section 96 of the text notes that “scaling up new and additional grant-based and concessional finance from developed countries remains critical to support developing countries, particularly as they transition in a just and equitable manner and recognises that there is a positive connection between having appropriate fiscal space, and climate action and advancing on a pathway towards low emissions and climate resilient development.”

It is apparent that Nigeria cannot unlock its future for e-mobility without intensive climate finance. Private climate finance is also instrumental in giving the country access to the tools, technology, knowledge capacity and inclusion mechanisms for its 2060 EV adoption. 36 years does seem far from now, but with the slow pace at which we are going, we may not have gotten far by 2030 or 2035.

There is a huge potential in Nigeria’s e-mobility sector with several initiatives and partnerships already underway to promote e-mobility in the country. Collaborations between the government, private sector, and international organizations aim to develop charging infrastructure, provide incentives for EV adoption, and create a conducive policy environment. In December 2023, the Minister of Finance and the Coordinating Minister of the Economy, Wale Edun, after his return from Dubai’s COP28 said major manufacturers of electric vehicles have started expressing interest in their determination to establish electric vehicles plants in Nigeria after the president launched an initiative of electric vehicles.

Moreover, in June 2023, the Federal Government adopted a new National Automotive Industry Development Plan (NADIP) that would span between 2023-2033. The NADIP will provide room for an increase in the local production of vehicles, reaching 40% of local content, and attaining 30% of locally produced electric vehicles (EVs). The National Automotive Design and Development Council (NADDC) revealed that the government has provided a 10-year tax relief for EV manufacturers in Nigeria, which is expected to increase investments in Nigeria’s auto sector.

Since 2021 when Nigeria launched the first locally assembled electric vehicle, Hyundai Kona, made by Stallion Motors, there’s been an opening up of more possibilities for EVs in the country. The Lagos state government plans to deploy no fewer than 1000 electric buses (EBs) in the next 24 months. The state, in collaboration with Oando Clean Energy Limited (OCEL), has already deployed two e-vehicles (EVs) to test proof the concept and there are plans to increase this to 50 buses during the pilot phase. In July last year, Ogun state launched the E-mobility and Gas-Mobility programme which will swap petrol-dependent motorcycles and tricycles with electricity-powered ones.

Many companies are looking to enter Nigeria’s electric vehicle industry, planning to assemble thousands of EVs locally, driven by the rising fuel prices and the removal of fuel subsidies. Indigenous companies in Nigeria, such as Siltech and MAX, have already introduced their electric vehicle designs in the market, indicating further development and production. ThinkBikes, a nonprofit organization, started delivering its locally produced electric tricycles to customers in Nigeria, in 2022. Possible EVS, a Nigerian electric mobility firm, is gearing up to launch EV assembly plants in Nigeria that will produce up to 10,000 EVs annually. Saglev, a United States EV manufacturer, has finalized plans to begin assembling electric vehicles at its Assembly Plant located in Ikorodu, Lagos State.

With so much at stake for Nigeria’s sustainable future, the country must do all it takes to tap into all available finance  initiatives set not just by COP countries, but private organizations. Although the Lagos State government is working with the World Bank to enhance the e-mobility system and improve the transport sub-sector of the economy, the country can secure more funding from initiatives like the Global Facility to Decarbonize Transport (GFDT) and Green Climate Fund (GCF) with respect to e-mobility.

The World Bank established the Global Facility to Decarbonise Transport (GFDT) at COP26, a new multi-donor trust fund that, at the time, aimed to mobilize $200 million over the next 10 years to decarbonise road transport in emerging markets and developing economies in the Global South. This funding will support initiatives like electric bus fleets, charging stations, and renewable energy integration for transport projects. In its first year of operations, GFDT provided a $350,000 grant to Ghana’s electric buses project and a $750,000 grant supporting a Regional financing facility to decarbonize transport in Sub-Saharan Africa.

There’s also the Green Climate Fund (GCF) which received a boost to its second replenishment (GCF-2) with six new pledges from Australia, Estonia, Italy, Portugal, Switzerland and the United States of America (USA) in Dubai. The new funding at the opening high-level segment of world leaders at COP28 totalled $3.5 billion. The GCF is the world’s largest climate fund, mandated to support developing countries raise and realize their Nationally Determined Contributions (NDC) ambitions towards low-emissions, climate-resilient pathways. In 2022, Nigeria was among 13 African countries to receive more than $194 million as part of its Inclusive Green Financing Initiative (IGREENFIN I) from the GCF. But we need to submit proposals on e-mobility in Nigeria in order to access specific funding for green transport.

Nigeria is facing a series of challenges which will continue to hinder e-mobility adoption if the necessary steps are not taken. Access to reliable and affordable clean energy is one, necessitating a robust grid modernization alongside the e-mobility transition. Infrastructure development which has built up a “charge anxiety” discourages potential adopters. Climate finance can be used to invest in building charging stations, particularly in strategic locations like highways and residential areas. Public-private partnerships (PPPs) can accelerate the installation of charging stations.

Affordability for EVs is also a key challenge for Nigeria’s teeming population. The upfront cost is higher than internal combustion engine vehicles (ICEs). However, innovative financing models such as lease-to-own options and pay-per-use schemes can ease the financial burden for individual buyers. In Egypt, for instance, there is a subsidy of up to 50,000 Egyptian pounds on the purchase of locally manufactured EVs.

Nevertheless, the targets set at COP28 laid the foundation for some quantitative breakthroughs, ensuring that the journey toward a zero-emission road future remains at the forefront of global climate action. COP28 may have ended, but COP finance initiatives will yet play a vital role in expanding e-mobility in Nigeria but sustained progress requires multiple approaches. Effective utilization of existing initiatives, exploring innovative financing mechanisms, building capacity, and attracting diverse funding sources are crucial for scaling up context based e-mobility solutions.

Ultimately, Nigeria must also exhaustively utilize future COPs as a platform for knowledge sharing and technology transfer. Partnerships with developed nations can provide access to advanced e-mobility technologies and expertise, accelerating Nigeria’s transition. By harnessing the potential of e-mobility, Nigeria can not only reduce its carbon footprint and improve air quality, but also create new jobs, spur economic growth, and solidify its position as a leader in sustainable development in Africa and the world.

Abiodun Salako, a Journalist and Editorial Assistant at UK–based Divinations Magazine, writes from Lagos. He can be reached on X @i_amseawater.