VP. Osinbajo canvasses phased transition from fossil fuels

Withdrawing financing for fossil fuels may deepen energy poverty’

The Federal Government has canvassed gradual adoption and implementation of the transitioning scheme for fossil fuels, especially for Africa’s developing economies with huge energy access gaps.

This followed the restriction of funding by many development finance institutions for investments in fossil fuels.

Vice President Yemi Osinbajo had argued that with a population of about 120 million people without access to reliable and affordable electricity, a just transition to net-zero emissions, probably one where gas as a fossil fuel was still supported, especially for those in Africa, was important, especially as it would facilitate an end of polluting fuels such as coal and diesel.

Osinbajo noted that the deployment of the five million solar power connections, which targets 25 million households across the country under the Economic Sustainability Plan (ESP), reaffirmed Nigeria’s commitment to the global green energy initiative.

He stated this yesterday during a meeting with European Union (EU) delegation led by its Executive Vice President, Valdis Dombrovskis, maintaining that the international community should preserve financing for gas projects in Nigeria and other developing countries during the transition to net-zero emission.

Discussions at the meeting, which held virtually focused on bilateral investment agreements between Nigeria and the EU cutting across diverse areas including technology, intellectual property rights, research and innovation, humanitarian assistance, energy access and renewable energy.

Already, the World Trade Organisation (WTO) had perfected plans to unveil a Trade and Environmental Sustainability (TES) joint initiative group, which would be a forum for discussing carbon border taxes.

A WTO released last November on objectives of the group had indicated that its work programme could contribute to eliminating tariff and non-tariff barriers on environmental goods and services, reforming inefficient fossil fuel subsidies and promoting a global circular economy by facilitating trade along supply chains.

The EU was expected to make a proposal in the second quarter for a carbon border tax on imports of products relating to their carbon footprint in a scheme designed to take effect in 2023.

Although viewed by some as a form of green protectionism, carbon border taxes are designed to encourage the use of less carbon-intensive technologies globally and are likely to result in standardisation of what might qualify, as ‘green’ or low-carbon product, including key steel and aluminum areas.

Similarly, several international oil firms are already realigning their operations and reducing investments in upstream activities with a view to embracing cleaner fuels.

Osinbajo said: “A point we can talk about is the sort of support that we hope to get from the EU especially with respect to ensuring that we meet our commitment to net-zero emissions by 2050. 

“Our commitment to energy transition is firm and for us, it is an area of comparative advantage. So, we hope to leverage that. We will be happy to work on improving the investment environment to ensure that we work as much as possible with the EU partners.”

Stressing the need to leverage opportunities to build a stronger partnership with the EU in the gas sector, he said Nigeria would explore the caveat in the EU green energy financing instruments to seek better ways of financing gas projects in the country.

On his part, Dombrovskis dwelled on the importance of reviewing investment agreements between Nigeria and the EU, disclosing the commission’s plan to increase its external investment capacities.

On the Vice President’s call for sustained financing of gas investments in the country and beyond, he said the decision to phase out investments in fossil fuels was in line with its policy on promoting green energy initiatives.

He, however, urged the Federal Government to explore the caveat in the financing instruments to seek other ways of attracting investments for viable projects in the gas sector.