THE WORLD BANK’S SCALE-UP-TO-PHASE-DOWN APPROACH TO

ACHIEVING CLEAN ENERGY IN LOW- AND MIDDLE-INCOME

COUNTRIES: IMPLICATIONS AND RECOMMENDATIONS USING
NIGERIA AS A CASE STUDY

Destiny Ogedegbe

INTRODUCTION
Energy – whether its industrial and commercial use or its socio-economic significance to a nation – cannot be overstated.1 It stands
as a fundamental element, underpinning virtually every spectrum of human endeavors at least with regard to everyday activities,
in everyday life. However, its subsistence and use, in the traditional form, is continuously threatened by a host of factors.
Comparatively recently, challenges posed by climate change, escalating fuel expenses, supply interruptions, inflation, and the
repercussions of Russia's incursion into Ukraine, have escalated energy crises to the fourth position among the top 10 global risks
for the very first time. 2 Now, more than ever, there is an increasing need for countries to accelerate their transition to clean and
sustainable energy sources.

The World Bank has recently decided to expedite the transition process in low and middle-income countries. According to the 2023
Scaling Up to Phase Down Report from the World Bank, “...energy transition in low-and middle-income countries…will entail an
unprecedented expansion and transformation of power sector infrastructure. This transformation will require a massive scaling
up of renewable energy…followed by a phasing down of coal-fired power generation”. Certainly, low and middle-income countries
(“LMI Countries”) have something to worry about now, more than ever. With low credit scores and alarming debt services, there
is enough incentive for compliance on their part, especially as these countries notoriously rely on fossil fuels for revenue. Nigeria,
for instance, a paradigmatically LMI country, ranks as the third-largest GHG emitter in Africa. According to the International
Energy Association, Nigeria released 104.27 million metric tons of CO23 in 2018. This statistic signifies a substantial surge of
271.6% compared to emission levels in 1990.4 Certainly, in light of the upward trend in GHG emissions, the Nigerian government
has introduced policy interventions as a tool to hasten its shift toward clean energy. In 2017, the country pledged to reduce GHG
emissions by 20% by 2030, largely through increased solar energy adoption. However, despite these efforts, GHG emissions from
fossil fuels have increased by 17%. Initiatives such as establishing a 13,000 MW solar power infrastructure and extending solar
access to 5 million households as part of the COVID-19 recovery plan remain largely unrealized.

Although there is considerable policy intervention, a host of problems hinder their proper implementation. Some of these barriers
can be traced to political instability, lack of infrastructure, and limited private sector involvement, which can, in turn, be traced to
a highly burdened regulatory framework.5 Further, Nigeria lacks well-defined policies concerning the reduction of GHG emissions
and the mitigation of climate change effects in recent years.6 Experts suggest that despite the abundance of renewable energy
sources, Nigeria faces a lack of adequate government support to effectively harness these resources for electricity generation.7 Yet,
it is not in doubt that the country holds the potential to adopt a cleaner energy climate. It is this potential that the World Bank’s
newly adopted proposal hopes to explore. The extent to which that is possible and the mechanisms for achieving same, is the focus
of this paper. It proceeds with a conceptual framework of Nigeria’s energy landscape, policy attempts at energy transition, lessons

 Energy & Environmental Law Attorney; LLM, Harvard Law School ‘23.
1 Oyedepo, S.O. (2014) Towards Achieving Energy for Sustainable Development in Nigeria. Renewable and Sustainable Energy
Reviews, 34, 255-272. https://doi.org/10.1016/j.rser.2014.03.019
2 Allianz Risk Barometer 2023 - Energy crisis | AGCS. (2023, September 1). Allianz Commercial. https://commercial.allianz.com/news-

and-insights/expert-risk-articles/allianz-risk-barometer-2023-energy-crisis.html
3 The process of burning natural gas and petroleum products for heating and cooking releases carbon dioxide (CO2), methane (CH4),

and nitrous oxide (N2O) into the atmosphere. Particularly, emissions stemming from the consumption of natural gas contribute to 80%
of the total direct CO2 emissions originating from fossil fuels.
4 Ibid at 3.
5 Popoola, A. & Adeleye, B. (2020). Access and Limitations to Clean Energy Use in Nigeria. 10.1007/978-3-030-43578-3_12
6 Ibid at 3.
7 Dunne, D. (2023, February 17). The Carbon Brief Profile: Nigeria. Carbon Brief. https://www.carbonbrief.org/the-carbon-brief-

profile-nigeria/

Electronic copy available at: https://ssrn.com/abstract=4558417

to be learned from comparative sources, indigenous barriers to achieving this objective and, then, policy recommendations. Of
course, a conclusion naturally follows.

CONTEXTUALISING NIGERIA’S ENERGY LANDSCAPE

Whilst Nigeria is a country endowed with significant natural resources, her economic history was initially
driven by agriculture.8 During the colonial era, the country’s economy was defined by its shift from a
significant agricultural economy to a dependence on commodity exports.9 Notably, after gaining
independence in 1960, the country experienced another economic transformation due to its vast oil reserves.
The history of oil exploration in Nigeria traces back to the period between c. 1903 and 1958, marked by the
arrival of the country's first shipment of crude oil in Rotterdam. With time, oil exploration transitioned to
being primarily carried out by major integrated oil corporations such as Royal Dutch/Shell and British
Petroleum who emerged as dominant players in this arena, equipped with the financial capabilities to
finance the resource-intensive quest for oil within the colony. Moreover, their technological expertise and
advanced equipment positioned them for sustained success in the long run. This domination by prominent
oil conglomerates persisted as a defining characteristic of Nigeria's oil industry, extending well into the
1990s.10 The oil boom then led to Nigeria's focus on fossil fuel extraction, resulting in limited attention to
renewable energy sources. Despite this, it is worth noting that Nigeria's geographical location provides
abundant solar energy potential due to its proximity to the equator. The country also has substantial
hydropower potential. Some decentralized solar and small-scale hydro projects were also initiated in rural
areas during this period, often with international support.11
While oil exploration has long begun, the history of clean energy development in Nigeria is relatively recent
but has speedily gained momentum in response to environmental concerns, energy security, and the need
for sustainable development. Before the colonial period, Nigeria's energy needs were largely met through
traditional sources such as biomass—wood and agricultural residues, and animal waste for cooking,
heating, and lighting.12 However, the colonial era introduced electricity generation, primarily for
administrative purposes, in urban centers. Presently, with a population of over 200 million, Nigeria stands
as one of Africa’s most significant energy producers and consumers, with the country's energy profile being
a mix of traditional and mainly, modern energy sources.13
Nigeria has historically been tethered to fossil fuels, with oil serving as the primary source of national
revenue. This dependence has resulted in a myriad of implications—environmental, economic, and social—
that have shaped the trajectory of the nation's development. Environmentally, the extraction and burning of
fossil fuels have led to severe degradation in parts of Nigeria. The Niger Delta, where the majority of oil
production is concentrated, has been a hotspot for oil spills, some of which rival the Exxon Valdez disaster
in magnitude. These spills have poisoned freshwater sources, degraded farmlands, and decimated fish
populations, leading to catastrophic consequences for local ecosystems and the communities that rely on

8 History of Agriculture In Nigeria - Agriculture Nigeria. (2013, September 23). Agriculture Nigeria.
https://www.agriculturenigeria.com/history-of-agriculture-in-nigeria/
9 Nigeria - Oil, Agriculture, Trade. (n.d.). Encyclopedia Britannica. https://www.britannica.com/place/Nigeria
10 Phia Steyn (2009) Oil Exploration in Colonial Nigeria, c. 1903–58, The Journal of Imperial and Commonwealth History, 37:2, 249-

274, DOI: 10.1080/03086530903010376

11 Chanchangi, Y.N., Adu, F., Ghosh, A. et al. Nigeria's energy review: Focusing on solar energy potential and penetration. Environ

Dev Sustain 25, 5755–5796 (2023). https://doi.org/10.1007/s10668-022-02308-4

12 Jekayinfa, S. O., Orisaleye, J. I., & Pecenka, R. (2020). An Assessment of Potential Resources for Biomass Energy in Nigeria.

Resources, 9(8), 92. https://doi.org/10.3390/resources9080092

13 Oyedepo, S.O. Energy and sustainable development in Nigeria: the way forward. Energ Sustain Soc 2, 15 (2012).

https://doi.org/10.1186/2192-0567-2-15

Electronic copy available at: https://ssrn.com/abstract=4558417

them. Gas flaring, a byproduct of oil extraction, releases harmful pollutants into the atmosphere, further
exacerbating the environmental health of the region.
Economically, Nigeria's reliance on oil revenue has bolstered and hindered its growth. While oil exports
have filled national coffers, leading to significant investments in infrastructure and other sectors, they have
also made the country vulnerable to global oil price fluctuations. Socially, oil wealth has not been evenly
distributed, and perceived or real inequities have often led to social unrest. The Niger Delta has witnessed
persistent conflict, with local communities feeling marginalized and deprived of their rightful share of the
region's wealth. Furthermore, this dependence has also influenced political decisions and priorities,
sometimes leading to corruption and a lack of transparency in governance.
Historically, Nigeria’s greenhouse gas (GHG) emissions have been dominated by emissions from the
energy sector, primarily due to oil and gas exploration, production, and combustion. Emissions from the
energy sector have witnessed variations over the years but have been on an upward trend. The combustion
of fossil fuels, especially in the power and transport sectors, and gas flaring in the Niger Delta, are major
contributors.14 While there have been efforts to reduce gas flaring, it remains a substantial source of GHG
emissions. As the country industrializes further, without the adoption of cleaner technologies, emissions
from this sector could rise even more.

Image Description: A graph showing Nigeria's Greenhouse Gas (GHG) Emissions from 1990-2020 in kt
of CO2 equivalent
Image Source: Macrotrends (World Bank)

Baseline black carbon emissions for gas flaring in the Niger Delta region of Nigeria. (2014, August 9). Baseline Black Carbon
14

Emissions for Gas Flaring in the Niger Delta Region of Nigeria - ScienceDirect. https://doi.org/10.1016/j.jngse.2014.07.026

Electronic copy available at: https://ssrn.com/abstract=4558417

Ultimately, fossil fuels have indeed been a source of considerable revenue for Nigeria and have fueled its
developmental progress. However, the adverse consequences they have generated, including environmental
deterioration, economic susceptibilities, and societal strains, demand acknowledgment. As the world
embraces the transition to renewable energy, Nigeria finds itself grappling with a multifaceted challenge:
the need to redefine its reliance on fossil fuels. This entails striking a delicate equilibrium between its
developmental imperatives and the imperative to safeguard the environment and uphold social equity.

POLICY AND REGULATORY FRAMEWORKS FOR CLEAN ENERGY TRANSITION IN

NIGERIA
Globally, countries are steering toward a new energy era, propelled by the fourth major transition in modern
times, a trajectory set in motion by the COP 21 Paris Agreement.15 This gradual shift towards cleaner fuels
and the global push for green energy offers Nigeria the opportunity to reposition its energy industry. The
country’s reliance on oil has overshadowed the potential of other energy sources.16 Diversifying the energy
mix, particularly towards renewables, is now essential for sustainable growth. Expanding the grid and
promoting decentralized energy solutions are crucial and Nigeria's vast renewable energy potential provides
a silver lining. Seeing as the country ranks among the world’s top ten producers of oil and has vast natural
gas reserves,17 a concerted effort is required to meet the emissions target, and government policy has a
crucial role to play in making this happen. With appropriate investments and policy frameworks, Nigeria
can harness solar, wind, and hydropower to meet its growing energy demands.
Promisingly, from 2015 till date, the Nigerian government has taken numerous bold steps towards reducing
Nigeria’s GHG emissions including (1) signing the Paris Agreement in September 2016 and ratifying it in
March 2017; (2) pledging to reduce GHG emissions by 20% by 2030 upon signing the Paris Agreement;
(3) passing the Climate Change Act in November 2021 (“the Act")18; (4) and committing to reach Net Zero
between 2050 and 2070. Particularly, the Act seeks, among other things, to mainstream climate change
actions, provide a system of carbon budgeting, and establish a National Council on climate change to
measure impact and/or track progress in Nigeria.
Energy-related policies in Nigeria primarily revolve around the comprehensive development and effective
regulation of both the petroleum and electricity industries, given that these sectors constitute the major
components of the country's energy landscape.19 Notably, the petroleum and electricity markets stand as
the key spheres of influence within the Nigerian energy sector.20 Specific policy and regulatory frameworks
that reflect the legal and theoretical outlook of the Nigerian government on the implementation of renewable
energy within the sector include:
● National Electric Power Implementation Policy 2001

15 Hidden in Plain Sight: Nigeria’s Energy Transition. (2021). In Seplat Energy.

https://www.seplatenergy.com/media/03gkdkju/hidden-in-plain-sight-final-summit-with.pdf
16 Ending Nigeria’s Oil Dependency: Not If, But When. . .and How | Natural Resource Governance Institute. (2022, March 9). Natural

Resource Governance Institute. http://resourcegovernance.org/articles/ending-nigerias-oil-dependency-not-if-whenand-how

17 The World’s 10 Biggest Oil Exporters. (2023, July 28). Investopedia. https://www.investopedia.com/articles/company-

insights/082316/worlds-top-10-oil-exporters.asp
18 The Climate Change Act, 2021.
19 Policy and Regulatory Framework for Energy in Nigeria - Energypedia. (n.d.). Policy and Regulatory Framework for Energy in Nigeria

- Energypedia.
https://energypedia.info/wiki/Policy_and_Regulatory_Framework_for_Energy_in_Nigeria
20 Ibid at 19.

Electronic copy available at: https://ssrn.com/abstract=4558417

Electric power generation dates back to 1896 with the British colonial government's efforts in Ijora Lagos.
However, Nigeria has grappled with persistent power shortages since the 1960s, resulting in consistent and
widespread outages. This unreliable supply has caused significant disruptions. In 2000, the federal
government took action by establishing the Electric Power Implementation Committee, tasked with
advising on reforming the power sector. This initiative led to the formulation of the National Electric Power
Implementation Policy 2001 (NEPIP). The NEPIP outlines the foundational structure of Nigeria's strategy
for sustainable power distribution, prioritizing efficient distribution and utilization. 21
● National Energy Policy 2003
The Electric Power Implementation Committee proposed the National Energy Policy 2003 (NEP 2003) in
2003 as a means to harness Nigeria's energy resources. NEP 2003 prioritizes the efficient utilization of
sustainable energy sources, particularly highlighting solar energy, and urges the proactive integration of
solar power into the country's energy mix. This policy was subsequently revised, leading to the
establishment of the National Energy Policy 2013. The 2013 version reaffirms the significance of enforcing
and achieving sustainable energy objectives, while also criticizing the shortcomings in implementing these
goals. The policy underscores concern about implementation failures, energy loss, inefficiency, and
wastage in the pursuit of sustainable energy targets.22
● Renewable Energy Master Plan 2005
The Renewable Energy Master Plan 2005 (REMP) advocates for the adoption of renewable energy sources
and outlines a plan for their implementation. It envisions Nigeria's renewable energy objectives and aims
to tackle the pivotal aspects necessary for their achievement. According to the REMP, Nigeria's electricity
demand is projected to surpass 315MW by 2030. The plan's overarching objective is for renewable sources
to contribute to more than 20% of the total energy supply.23
● Renewable Energy Policy Guidelines 2006
The Renewable Energy Policy Guidelines 2006 (“REPG”) is a publication from the Federal Ministry of
Power that outlines policy goals aimed at promoting the advancement and utilization of renewable energy.
While sharing similarities with the REMP, the REPG places greater emphasis on aspects related to the
generation and distribution of renewable energy. It also delineates a plan for efficiently managing the
Renewable Electricity Trust Fund. Additionally, the REPG presents incentives to encourage the adoption
of renewable energy, including a proposed five-year tax exemption for investors in renewable energy
projects. These incentives are intended to attract a broader range of stakeholders and stimulate increased
participation in the sector.24
● Captive Energy Generation Regulations 2008
The Captive Energy Generation Regulations 2008 (“CEGR”) were introduced by the Nigerian Electricity
Regulatory Commission (NERC) in 2008 to oversee the generation of electricity for private or small-scale
consumption. These regulations share similarities with the broader regulations but are tailored for smaller
generators or users. According to the CEGR, captive power generation is defined as the production of

21 Isreal, Odude, Odekina, Akinpelumi, & Iwuchukwu. (2022, July 27). Spotlight: renewable energy project development in Nigeria.
Lexology. https://www.lexology.com/library/detail.aspx?g=f3bfd854-3263-413c-a985-273644a2bccc
22 Ibid at 21.
23 Ibid at 21.
24 Ibid at 21.

Electronic copy available at: https://ssrn.com/abstract=4558417

electricity exceeding 1 MW for the generator's own consumption, without being sold to a third party. These
regulations also establish guidelines for the licensing and oversight of captive energy generators.25
● National Renewable Energy Efficiency Policy 2013
The National Renewable Energy Efficiency Policy 2013 was formulated by the Federal Ministry of Power
with the aim of promoting sustainable power generation and unifying the provisions of prevailing energy
regulations. This policy endeavors to enhance energy efficiency while addressing administrative and
societal obstacles that impede the sustainable utilization of energy resources.26
● National Energy Efficiency Action Plans 2015–2030
The National Energy Efficiency Action Plans 2015–2030 (“NEEAP”) were embraced by the Inter-
Ministerial Committee on Renewable Energy and Energy Efficiency, subsequently gaining approval from
the National Council on Power. While influenced by the template designed by the ECOWAS Centre for
Renewable Energy and Efficiency, the NEEAP offers a comprehensive perspective on Nigeria's energy
landscape, outlining strategies for achieving renewable energy objectives. The NEEAP particularly
concentrates on vital areas including optimizing energy usage, reducing emissions, promoting efficient
lighting, monitoring distribution, implementing enforcement measures, and ensuring conformity with
standards for materials, residences, structures, and industries. The NEEAP also places a notable emphasis
on capacity enhancement and the utilization of indigenous resources and workforce. The Federal Ministry
of Power is tasked with overseeing the implementation inputs of the NEEAP. Additionally, the plan
delineates the creation of a framework to monitor, verify, and uphold minimum energy performance
standards.27
● Order on the Mandatory Dispatch of Hydropower Plants 2019
In 2019, the National Electricity Regulatory Commission issued an order stipulating that power generated
by the three hydropower stations in Nigeria must be prioritized for offtake before turning to gas-powered
plants.28
● Energy for All – Mass Rural Electrification Programme 2020
Introduced in August 2020, this initiative reflects the federal government's commitment to supplying
renewable energy (mainly solar) to 304 healthcare facilities and schools nationwide. The program, set to
run for 12 months, will be carried out in partnership with existing agencies, aiming to power these
institutions using sustainable energy sources.29
● National Climate Change Policy 2021–2030
The National Climate Change Policy 2021–2030 seeks to execute the existing mitigation strategies with the
goal of fostering a low-carbon, high-growth economic development model that ensures environmental
sustainability in Nigeria.30
Nigeria has also embarked on a series of impactful renewable energy projects, showcasing its commitment
to sustainable development and energy transformation. These initiatives encompass a wide range of sectors,

25 Ibid at 21.
26 Supra note 21.
27 Supra note 21.
28 Supra note 21.
29 Supra note 21.
30 Supra note 21.

Electronic copy available at: https://ssrn.com/abstract=4558417

aiming to harness the potential of renewable sources while addressing the nation's energy challenges. They
include The Renewable Electricity Action Programme; The Nigerian Electrification Project; the Energising
Education Programme; and the Power Sector Recovery Programme 2019. Collectively, these projects
epitomize Nigeria's multifaceted approach towards renewable energy adoption. They signify the nation's
intent to diversify its energy portfolio, mitigate environmental impacts, and drive socio-economic progress.
While each initiative addresses a distinct aspect of energy challenges, they share a common thread: a
commitment to building a more sustainable and resilient energy landscape. As Nigeria navigates its energy
transition journey, these projects exemplify its dedication to shaping a cleaner, more prosperous future
powered by renewable resources.
Furthermore, the legislative landscape in Nigeria has played a pivotal role in shaping the trajectory of clean
energy adoption and sustainability in the country. Several significant legislations have been established to
lay the foundation for renewable energy operations. A landmark and noteworthy legislative milestone in
Nigeria is the Climate Change Act 2021. This legislation establishes a robust framework to effectively
mitigate greenhouse gas emissions. Beyond its environmental focus, the act underscores the significance of
aligning climate change strategies with broader policies to drive socioeconomic advancement while
preserving environmental integrity.
The Climate Change Act 2021 introduces a mechanism to enforce climate action targets among both private
and public entities. This reinforces the imperative of adhering to stipulated climate change strategies and
aligning with the National Climate Change Action Plan. The enforcement aspect reinforces accountability
and ensures that tangible progress is made in the pursuit of sustainability. Central to the Act's approach is
the periodic formulation of the National Climate Action Plan, scheduled every five years. This plan serves
as a dynamic roadmap, identifying strategic activities that steer the nation's emission profile towards
harmony with predetermined carbon budget goals. This iterative process enables adaptation and refinement,
ensuring that strategies remain responsive to changing circumstances and emerging challenges. By
mandating alignment between climate action and socioeconomic development, the Act exemplifies a
holistic approach to sustainability. Through its stringent compliance requirements, it drives tangible
progress towards emission reduction goals. Its forward-looking framework, underscored by the National
Climate Action Plan, fosters adaptability and responsiveness, positioning Nigeria to navigate the
complexities of a rapidly evolving climate landscape. In sum, the Climate Change Act 2021 stands as a
testament to Nigeria's commitment to addressing climate change comprehensively, aiming to secure a more
resilient and sustainable future for its citizens.31
First among other pieces of legislation is the Constitution of the Federal Republic of Nigeria 1999 which
grants the National Assembly the authority to legislate electricity generation and transmission, with
particular focus on hydropower generation and renewable energy power plants. There is also The Electric
Power Sector Reform Act (EPSRA) 2005 which introduced comprehensive provisions for competition,
consumer protection, licensing, and power generation and transmission. The Environmental Impact
Assessment Act 1992 emerged as a safeguard against the adverse environmental consequences of energy-
related activities. This act compelled project managers to assess potential environmental impacts prior to
undertaking projects, serving as a critical tool to mitigate the negative effects of hydrocarbon-based energy
generation. Likewise, The Nigerian Electricity Management Services Agency (NEMSA) Act 2015 focuses
on maintaining standards in power distribution through technical inspections and testing of electrical
materials.32

31 Supra note 21.

32 Supra note 21.

Electronic copy available at: https://ssrn.com/abstract=4558417

Lastly, the energy sector in Nigeria operates within a multifaceted regulatory and consenting framework,
featuring a range of key entities that play integral roles in guiding, supervising, and ensuring the industry's
effective functioning. Among these entities are the Federal Ministry of Power, the Nigerian Electricity
Regulatory Commission (NERC), the Federal Ministry of Environment, the National Environmental
Standards and Regulations Enforcement Agency, the Nigerian Electricity Management Services Agency
(NEMSA), the Energy Commission of Nigeria, the Transmission Company of Nigeria, and the Nigerian
Bulk Electricity Trader, among others. These regulatory and consenting framework forms the backbone of
Nigeria's energy sector. These entities collaborate to create a coherent ecosystem that encompasses policy
formulation, regulatory oversight, environmental protection, technical standards maintenance, and financial
stability. Their concerted efforts contribute to shaping a resilient and sustainable energy landscape in
Nigeria, where diverse stakeholders work in tandem to meet the nation's energy needs while upholding
environmental and economic considerations.

LESSONS FROM A COMPARATIVE ANALYSIS ON THE GL0BAL OBJECTIVE OF

ACHIEVING CLEAN ENERGY
Clean energy policies across the globe have been implemented with varying degrees of success, often
depending on the specific characteristics and challenges of individual countries. A comparative analysis of
these policies reveals that while there are many common themes, each nation has tailored its approach to
fit its unique context. For Nigeria, understanding these international paradigms can be instrumental in
forging a sustainable energy future.
Countries such as Germany33 and Denmark34 have been at the forefront of renewable energy policies, thanks
to their early adoption of ‘feed-in’ tariffs. These are pricing mechanisms designed to accelerate the
investment in renewable energy sources. The principle behind this is simple: producers of renewable energy
are paid a set rate for the electricity they feed into the grid, making the venture financially attractive. This
policy drove significant investment in renewable technologies, particularly wind and solar. However, for a
nation like Nigeria, where the energy infrastructure is less developed, the direct adoption of feed-in tariffs
might not yield the same results. Instead, there's a need for an initial focus on developing robust grid
infrastructure to handle diverse energy sources.
On the other hand, China's approach to clean energy has been through massive state-driven investments.
By making clean energy a priority in its plans, China has become a global leader in solar panel and wind
turbine manufacturing.35 This state-driven model may align with Nigeria's context where strong
governmental intervention could drive significant shifts in the energy landscape. By prioritizing renewables
in national developmental plans and budgets, Nigeria can stimulate domestic industries and research.
In contrast, the U.S. has adopted a mixed approach, combining state mandates, federal tax incentives, and
market-driven solutions to promote renewable energy. The Production Tax Credit (PTC) and the Investment
Tax Credit (ITC) have particularly been pivotal in promoting wind and solar energy, respectively.36 For

33 W. (2015, July 15). The German Feed-in Tariff - futurepolicy.org. futurepolicy.org. https://www.futurepolicy.org/climate-
stability/renewable-energies/the-german-feed-in-tariff/
34 Klingberg-Jensen, Schlüter, & Harkjær Frederiksen. (n.d.). Q&A: The legal framework for renewable energy in Denmark. Lexology.

https://www.lexology.com/library/detail.aspx?g=6e255657-0feb-4f5a-8e56-12355806428e
35 Hawkins, A., & Cheung, R. (2023, June 29). China on course to hit wind and solar power target five years ahead of time. The Guardian.

https://www.theguardian.com/world/2023/jun/29/china-wind-solar-power-global-renewable-energy-leader
36 5 Renewable Energy Policies, Markets, and Deployment in China and the United States | The Power of Renewables: Opportunities

and Challenges for China and the United States | The National Academies Press. (n.d.). https://doi.org/10.17226/12987

Electronic copy available at: https://ssrn.com/abstract=4558417

Nigeria, adopting a blend of tax incentives and mandates can stimulate both domestic and foreign
investments in its clean energy sector.
However, it's important to remember that Nigeria's energy challenges also include ensuring energy access
for a large portion of its population. Thus, any clean energy policy should also consider off-grid solutions.
Countries like India have had success with decentralized renewable energy systems, allowing remote areas
to gain electricity access without waiting for grid expansion. This model can be particularly relevant for
Nigeria, given its vast rural landscape. While international clean energy policies provide valuable insights,
Nigeria's approach needs to be multifaceted and tailored to its unique challenges and opportunities. By
learning from global best practices and adapting them to the local context, Nigeria can pave the way for a
sustainable energy future that not only addresses environmental concerns but also drives economic growth
and improves the quality of life for its citizens.

RENEWABLE ENERGY POTENTIAL AND RESOURCES

Nigeria possesses an abundance of natural resources and, as a result, holds substantial potential for the
development of renewable energy sources, namely solar, wind, and hydro.37 Given its equatorial position,
Nigeria receives a considerable amount of sunlight, averaging about 6.5 hours of peak sun hours daily,
which translates to an estimated 600,000 Terawatt-hours of solar energy annually.38 With vast expanses of
land, especially in the northern region, the country is primed for the installation of large-scale solar farms.
Moreover, with the decreasing costs of photovoltaic (PV) panels and increasing efficiency rates, solar
energy is not just feasible but can also be cost-effective. Solar energy also offers a decentralized solution
to the power challenges faced by many remote areas in Nigeria, where extending the national grid might be
logistically or economically challenging.39
Wind energy, while not as omnipresent as solar, also holds promise, especially in specific locations.
Nigeria’s coastline and some highland areas, notably in states like Sokoto, Katsina, and Kano, have shown
wind speeds conducive to the generation of wind power. Although the total wind energy potential hasn’t
been fully tapped, it's estimated to be about 2,000 MW, a significant boost when combined with other
renewable sources. However, perhaps the most historically significant source of renewable energy for
Nigeria has been hydro. With numerous large rivers, including the Niger and the Benue, Nigeria has
traditionally invested in hydroelectric projects. The country has an estimated small-scale hydropower
potential of about 3,500 MW. Existing large hydro projects like the Kainji, Jebba, and Shiroro dams provide
substantial energy, but there's still considerable untapped potential in medium and small-scale hydro
projects that could power rural communities and offer grid support.
In addition to these primary sources, biomass derived from vast agricultural wastes can also serve as an
essential contributor to Nigeria's renewable energy mix. Given that agriculture plays a pivotal role in
Nigeria's economy, leveraging biomass would not only help in addressing energy needs but would also
provide an effective solution for waste management.40

37 Supra note 17.

38 Diemuodeke, O. E., Mulugetta, Y., Njoku, H. I., Briggs, T. A., Ojapah, Solar PV Electrification in Nigeria: Current Status and
Affordability Analysis. M. M., & Publishing, S. R. (2021, May 21).
39 Chanchangi, Y. N., Adu, F., Ghosh, A., Sundaram, S., & Mallick, T. K., Nigeria’s energy review: Focusing on solar energy potential

and penetration - Environment, Development and Sustainability (2022, April 13).

40 Supra note 17.

Electronic copy available at: https://ssrn.com/abstract=4558417

Significant opportunities lie in the transition to clean energy in Nigeria. Firstly, Nigeria boasts of a vast
clean resource potential. With vast sunlight hours, it has immense solar energy potential. Wind energy,
especially in coastal regions, and bioenergy from agricultural waste, are other promising avenues. Secondly,
clean energy has the potential to create numerous jobs, from manufacturing to installation, maintenance,
and research and development. This can significantly boost the nation’s economy. Thirdly, with advances
in micro-grid technologies, Nigeria has the opportunity to bypass the traditional centralized energy model.
Rural and remote communities, often the last to be connected to national grids, could be powered sooner
with localized renewable energy systems. Fourthly, moving away from fossil fuels will reduce the
environmental footprint of Nigeria's energy sector, preserving its rich biodiversity, reducing air pollution,
and making strides towards global climate change mitigation efforts. Finally, and probably most
importantly, by diversifying its energy sources, Nigeria can reduce its dependence on oil, a commodity with
volatile prices, and thus ensure more stable energy prices and security for its citizens.
However, despite the enormous potential, several challenges hinder the complete realization of Nigeria's
renewable energy prospects. The country, rich in both fossil fuels and renewable resources, stands at the
crossroads of an energy transition. As one of the largest economies in Africa, it has the potential to be a
leader in the region's transition to a sustainable energy future. The next subhead outlines the main challenges
in harnessing renewable resources in Nigeria.

BARRIERS TO CLEAN ENERGY ADOPTION AND TRANSITION

Although Nigeria is a country endowed with abundant renewable energy resources, numerous challenges
hinder the widespread adoption of renewable energy across communities in Nigeria.41 According to the
International Energy Agency, over 140 million people do not have access to energy in Nigeria, about 71%
of the country's population.42 Barriers to the widespread adoption of renewable energy in the region include
a lack of awareness, limited technical competence, insufficient investment, inadequate financial
mechanisms, absence of tax incentives, lack of local manufacturing and assembly plants, and inadequate
policy and regulatory frameworks.43 Below are some of the major challenges and potential solutions to
accelerate the mass adoption of renewable energy in the country.
1. Limited Infrastructure and Access to Electricity:
A significant challenge impeding the adoption of renewable energy in Nigeria is the insufficiency of
infrastructure and limited electricity access. The current energy grid's unreliability and incapacity to meet
rising power needs pose a major obstacle. Moreover, numerous rural regions lack electricity access,
hindering the introduction and sustainability of renewable energy solutions. To surmount this hurdle, a
comprehensive strategy is essential to enhance infrastructure, extend the electricity grid to remote areas,
and establish a solid basis for the seamless integration of renewable energy systems.
2. High Initial Costs and Financing:
Renewable energy adoption is hindered by the substantial initial expenses linked to installations. Solar
panels, wind turbines, and other technologies demand significant upfront investments, rendering them

41 Elochukwu, N. (2023, July 21). Renewable energy challenges in Nigeria and mass adoption. Stories. Climate Change Writers.
https://www.climatechangewriters.com/stories/renewable-energy-challenges-in-nigeria-and-mass-adoption
42 Ibrahim, & Zeydler. (2023, May 8). Here’s how Nigeria is tackling the barriers to its green energy transition. World Economic Forum.

https://www.weforum.org/agenda/2023/05/how-nigeria-is-tackling-barriers-to-its-green-energy-transition/
43 Nwachukwu, I. (2023, May 25). Climate activists call for the removal of barriers to renewable energy. Businessday NG.

https://businessday.ng/news/article/climate-activists-call-for-removal-of-barriers-to-renewable-energy/

Electronic copy available at: https://ssrn.com/abstract=4558417

unfeasible for numerous individuals and communities, especially those in financially constrained rural
regions. Facilitating collaborations between government bodies, financial establishments, and private
backers can facilitate accessible financial alternatives, such as low-interest loans and grants, mitigating
costs and advancing the affordability and availability of renewable energy systems.

“To finance a just transition that is consistent with both the goals of ensuring universal access to
affordable, reliable, sustainable, and modern energy by 2030, and the 2015 Paris Agreement on Climate
Change, developing countries will have to mobilize far more capital than they do today.”
– World Bank, Scaling Up to Phase Down Report 2023.

3. Lack of Public Awareness and Education:

A notable challenge in Nigeria is the insufficient public awareness and education regarding the merits and
potential of renewable energy. Numerous communities remain unaware of the environmental benefits,
economic savings, and revenue prospects linked to adopting renewable energy sources. The implementation
of comprehensive public awareness initiatives and educational schemes can play a pivotal role in closing
this awareness gap. By disseminating information about the significance of renewable energy, these efforts
empower citizens to make informed choices and actively participate in its adoption.
4. Contextualizing Policy and Regulatory Frameworks:
The fragmented and non-contextualized policy and regulatory frameworks in Nigeria pose a barrier to the
widespread adoption of renewable energy. For example, while it is commendable that the Nigerian Climate
Act 2021 codifies a framework for Nigeria to attain low greenhouse gas (“GHG”) emissions, the Act lacks
local context and fails to proffer practical solutions to Nigeria’s carbon emission problem including but not
limited to legislating on the standards for pricing emission and determining a Pareto efficient tax rate for
carbon emission. But in the comparatively recent term, Nigeria appears to have taken some
counterproductive steps leaving stakeholders unsure as to its motivations. The International Energy Agency
recommended that to achieve Net Zero by 2050, no new oil and natural gas fields should be approved for
development beyond projects already committed as of 2021.44 Yet, in August 2021, Nigeria passed the
Petroleum Industry Act (“PIA”) with a view to attracting more carbon investments to the sector. A few
months afterwards, Nigeria awarded 161 marginal field licenses to new entrants into the sector.45 Clearly,
Nigeria’s normative aspiration pales in comparison with its reality and one could hazard a guess for why:
despite a strong will to commit to sustainability and achieving Net Zero emissions by 2070, Nigeria is
constrained by the existential fact that oil exports continue to supply 90% of Nigeria’s foreign exchange
earnings and half of federal government revenue.46

44 International Energy Agency, Net Zero by 2050: A Roadmap for the Global Energy Sector (IEA, 2021)
https://iea.blob.core.windows.net/assets/deebef5d-0c34-4539-9d0c-10b13d840027/NetZeroby2050-
ARoadmapfortheGlobalEnergySector_CORR.pdf Accessed 28 November 2022
45 The Cable, Marginal fields: NUPRC awards licenses to 161 companies, rakes N200bn, $7m (The Cable, 2021)

https://www.thecable.ng/marginal-fields-nuprc-awards-licences-to-161-companies-rakes-n200bn-
7m#:~:text=Marginal%20fields%20are%20smaller%20oil,18%20years%20of%20bureaucratic%20bottlenecks. Accessed 28
November 2022
46 Natural Resources Governance Institute, Ending Nigeria’s Oil Dependency: Not If, But When…and How (NRGI 2022)

https://resourcegovernance.org/blog/ending-nigeria-oil-dependency-not-if-but-when-and-
how#:~:text=Despite%20this%20stark%20reality%2C%20the,half%20of%20federal%20government%20revenues

Electronic copy available at: https://ssrn.com/abstract=4558417

A robust and facilitative legal structure is crucial for drawing investments, fostering innovation, and
ensuring the successful execution of renewable energy initiatives. It is imperative for the Nigerian
government to give precedence to the formulation of comprehensive renewable energy policies. These
policies should encompass provisions such as feed-in tariffs, tax incentives, and simplified permit
procedures, collectively establishing an environment conducive to the effective implementation of
renewable energy projects.
5. Technical and Maintenance Challenges:
Ensuring the efficient operation and maintenance of renewable energy systems demands technical
proficiency, a capable workforce, and dependable spare parts supply chains. Nigeria grapples with scarcities
of skilled technicians and restricted access to spare components, which jeopardizes the enduring viability
of renewable energy setups. To surmount this issue, a strategic approach involves channeling investments
into training initiatives, vocational learning endeavors, and the creation of local manufacturing capacities.
By nurturing a skilled labor pool and fostering self-reliance within the renewable energy domain, Nigeria
can effectively confront this challenge and fortify the sustainability of its renewable energy ventures.

POLICY RECOMMENDATIONS
Assuming arguendo that Nigeria’s major constraint to fully committing to a clean energy transition plan
and achieving Net Zero by 2070 is the impact such commitment may have on foreign exchange earnings
and revenue, then the solution would be to adopt a policy that minimizes loss of revenue without reducing
its commitments to low GHG emissions. At the risk of oversimplification, one of such policies will be to
diversify away from oil. Nigeria is blessed with a panoply of untapped natural resources: biomass,
geothermal, wind and hydropower, etc. In addition to diversifying from oil, this paper proposes the
following recommendations:
1. Nigeria should intensify efforts to transform the agriculture sector from primary to secondary levels
of production (i.e., from mere farming to processing or value-addition). This has a huge potential
to become Nigeria’s major source of foreign exchange earnings. For example, the global chocolate
industry is valued at $130 billion; of this amount, Cote D’Ivoire, Ghana and Nigeria account for
more than 72% of the raw materials earning a meagre $3.6 billion, $1.9billion and $804 million
respectively. With over 59% uncultivated arable land and a mechanization framework, Nigeria can
end its reliance on oil to a great extent through agriculture alone.

2. Imposition of a federal carbon tax. From a reputational and economic perspective, it is in the best
interest of companies and their directors to reduce the emission of CO2 because – as Alex Edmans47
puts it – delivering high profits is not shameful; failing to create social value is. Directors, therefore,
have both a legal and a moral duty, to act in the best interest of the company, which includes taking
into consideration the interest of the environment and the community within which they operate.48
However, exploring this option would require more policy considerations because taxing emissions
may impact final consumer costs.

47 Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit, Cambridge University Press, 2020, 382
48 Companies Act 2006, Section 172(2).

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CONCLUSION
In conclusion, Nigeria's extensive and diverse renewable energy potential presents a unique opportunity to
address its energy deficit, reduce carbon emissions, and drive sustainable development. With strategic
planning and steadfast commitments, the nation has the potential to become a frontrunner in Africa's
renewable energy transformation. Acknowledging the imperative of diversifying its energy sources and
minimizing environmental impacts, Nigeria has taken steps to incorporate renewables into its energy
policies. Despite these positive strides, challenges persist, including inadequate infrastructure, limited
access to financing, and the prevalence of fossil fuels. Nonetheless, Nigeria's dedication to cleaner energy
and sustainable progress signals a growing momentum toward achieving a more ecologically balanced
energy portfolio. Armed with abundant renewable resources, Nigeria can play a significant role in securing
energy and promoting sustainable growth. Yet, several obstacles hinder the broad adoption of renewable
energy solutions across communities in the country. Addressing infrastructure gaps, facilitating accessible
financing, raising public awareness, enacting supportive policies, and investing in technical expertise are
essential steps to surmount these challenges and unleash the vast potential of renewable energy. This
transition not only reduces emissions but also generates job opportunities, improves energy accessibility,
and drives economic advancement, steering Nigeria toward a resilient and sustainable future.

Electronic copy available at: https://ssrn.com/abstract=4558417