COP28 and its impact on Nigeria’s economy

The just concluded Conference of Parties (COP28) in Dubai, the United Nations sponsored climate summit, finally came up, as it ended, with a historic deal (first of its kind ever) that committed the world to a transition away from fossil fuels. This green deal reached by nations is the first time fossil fuels made it to a global climate deal. It included a commitment to transition away from all fossil fuels; with steps needed to turn the agreement into tangible actions. This was as the COP28 climate summit President, the United Arab Emirate’s (UAE’s) Sultan Al Jaber brought the gavel down (which was greeted with applause and laughter by delegates) on Wednesday, the 13th December 2023, after his remark that, “Together we have confronted the realities and sent the world in the right direction”. He had before that brokered an agreement strong enough that Saudi Arabia and other oil producing countries are kept on board, as the United States and the European Union (EU) drastically come low on the utilisation of fossil fuel. This deal, the way it was pragmatically handled and prosecuted by the COP28 president, involves Nigeria too because she still has fossil fuel sources (coal, oil and gas) in abundance. What this agreement calls for is that an oil producing nation like Nigeria should quickly shift her energy systems away from fossil fuels (in a just and orderly fashion). The agreement does not in any form, outrightly impose the policy on countries, but that every stakeholder (nations or economies) is called to contribute towards achieving the goals of the global transition effort.

As a close watcher of the global energy trend and climate issues, the very first reaction was, how would this development impact the economies of the nations that have not really exploited the fossil fuel resources optimally to their economic and financial advantages? This thought focuses on poorer nations, especially among the African countries that are disadvantaged (especially through loss of life and food scarcity) by the heavy environmental disasters of climate change that befall them, yet they are not heavy emitters nor the culprits that brought about the reason for the contemporary global warming that is threatening man’s sustainable existence on earth; in the forms of extreme weather conditions like drought that is ravaging the entire ecosystem, heat-waves and the devastating wildfires. Interestingly, it was this same Al Jaber, the chief executive officer of Abu Dhabi National Oil Company (ADNOC), that proposed the strategy of “Maximum energy, minimum emissions” barely a year ago. UAE as an oil producing nation and a technically advanced promoter of global energy business through the yearly conferences of international petroleum exhibitions (“ADIPEC”) that are constantly organised in Abu Dhabi, is involved too. With the “UAE Consensus” though, it has been observed that no previous COP policy had mentioned moving away completely from oil and gas, the fuels that have sustained the global economy for decades. 

The outcome of the deal visibly falls short of the specific fossil fuel “phase out” anticipated by most countries. This leaves a window, especially for low carbon footprint as the economies continue to engage the utilisation of natural gas in the energy industry, being a climate compliant energy source and a cleaner energy substrate. The latest pact even leaves room for burning of natural gas in the energy-mix transition plan for clean energies. The worrisome aspect about the Paris Agreement is the uncertainty surrounding limiting the targeted 1.5℃ global warming. The reason is because the pledge made to phase out coal at the COP26 climate summit at Glasgow in 2021, is still not realisable with the rising demand for coal consumption.

Nigeria needs to quickly up her game in the national gas master plan, as a matter of urgency! Looking at the pace of compliance in the energy transition to renewable sources, especially as contained in the COP28 deal, it still remains to be realised. Having cited a few instances above, it would not be practically or easily actualised by mere diplomatic horse-trading. Though, this is based on the fact that there are economies whose major sources of foreign exchange are from exports of hydrocarbon-based natural resources that are mainly fossil fuels (especially from the African continent and other poorer nations of the world). They may hold on to exploiting every available opportunity towards export earnings for the sake of their economies, as long as the situation permits. It is on this note that the petroleum industry in Nigeria should frantically work out means and ways to aggressively exploit and optimise earnings from the industry (both from within and outside the shores) in growing the economy. It is on this note also that the natural gas business needs to be massively engaged for export business with the attractive gas markets of the European Union. At the same time, the petroleum business needs (among upstream operations) to further focus more on crude oil drilling, and adequately service all the local refineries (including the Dangote facility) at least, for another four to five decades when petroleum driven vehicles shall be going extinct from the global automobile industry.

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