Commissioned research and write-up for KUMAT
Rethinking Nigeria’s Power
The transition from oil dependency to a sustainable energy mix in Nigeria has significant employment implications. To understand these implications, it is necessary to analyze Nigeria’s progress in reducing oil dependence and integrating renewable energy sources into the energy sector.
Nigeria, as a major oil producer, has recognized the need to diversify its energy mix to mitigate the economic and environmental risks associated with heavy reliance on oil. The country has made efforts to promote renewable energy and reduce carbon emissions. These efforts include the adoption of the National Renewable Energy and Energy Efficiency Policy (NREEEP) in 2015, which sets targets for renewable energy integration and energy efficiency improvements.
Assessing the present state of the energy sector involves analyzing the current share of renewable energy sources in it’s energy mix. This includes evaluating the installed capacity of renewable energy systems such as solar, wind, hydro, and biomass. Additionally, examining the progress of renewable energy projects, both at utility scale and distributed generation, provides insights into the level of integration and adoption of sustainable energy sources.
While the nation has made strides in promoting renewable energy, several challenges and opportunities arise during the transition from oil dependency. One significant challenge is the potential impact on employment in industries directly linked to oil, such as extraction, refining, and distribution. As the demand for oil decreases, job cuts and disruptions may occur in these sectors. Effective workforce transition strategies, including retraining and reskilling programs, are essential to mitigate the negative employment effects.
Jobs on the Line
Nigeria’s transition away from oil dependency is expected to have significant effects on employment in the fossil fuel industry. Non-oil sectors in Nigeria already provide more employment opportunities than the oil sector. The country plans to utilize natural gas as a transition energy source during the energy transition. However, the global shift away from fossil fuels could lead to job losses in Nigeria’s petroleum export sector. Overall, the transition away from oil dependency is likely to have both positive and negative impacts on employment in the fossil fuel industry in Nigeria.
The country is undergoing an energy transition from fossil fuels to renewable energy sources, which could result in job cuts in the oil extraction, processing, and distribution sectors. The just transition fund aims to mitigate the impact of these job losses by using a percentage of Nigeria’s oil and gas earnings. However, there are concerns about the fiscal challenges and job losses that could arise from this transition. The future of work in the oil and gas industry is uncertain, and there is a need for education and support for workers during this transition.
Nigeria faces challenges in achieving affordable clean energy and sustainable development goals, particularly in the fossil fuel industry. The country is rich in conventional energy resources, including oil, natural gas, lignite, and coal, but also has potential for renewable energy sources. However, meeting electricity demand remains a significant challenge. Nigeria has the opportunity to develop a sustainable energy system based on renewables, which can support socioeconomic recovery and development. Transitioning from fossil-based energy production to renewable sources is a global trend, and Nigeria must address challenges and embrace the benefits of renewable energy technology.
The Employment Shuffle
During Nigeria’s transition to sustainable energy, job cuts in oil-related industries are expected. Chevron plans to cut 25% of its Nigeria workforce, which includes 1,000 jobs. However, Nigeria’s renewable energy sector is experiencing rapid job growth, with expectations of more than doubling by 2023. The government has also launched an energy transition plan aimed at reducing emissions and creating jobs. While there will be job losses in the oil industry, the growth in the renewable energy sector is expected to offset some of these losses.
The renewable energy sector in Nigeria is expected to experience significant job growth in the coming years. By 2023, the sector is projected to create over 76,000 jobs, surpassing the number of jobs in the oil and gas industry. The growth in renewable energy jobs is seen as an opportunity for sustainable economic development and meeting the country’s energy needs. Nigeria has the potential to meet a significant portion of its energy demand using renewables, further emphasizing the importance of job creation in this sector.
The energy transition in Nigeria is seen as an opportunity to shift from fossil fuel to clean energy sources. Energy companies are mobilizing resources to transition to a low-carbon economy. However, there are obstacles to implementing a green transition, including inadequate financing and job consequences. Unions in Nigeria have reported an increase in casualization of the oil and gas workforce, leading to different treatment of permanent and contract workers. Overall, while the energy transition presents opportunities for change, there are challenges that need to be addressed in terms of financing and workforce transitions.
Where Investors Should Look
There are numerous entrepreneurship opportunities in the renewable energy sector in Nigeria. Some of the potential areas for investment include biofuel production, solar panel supply, and renewable energy installation. The training programs in Nigeria aim to empower young entrepreneurs to start income-generating enterprises in the renewable energy sector. However, it was noted that many Nigerians are not aware of the entrepreneurial opportunities in the renewable energy industry. The development of large-scale solar power and investment in mini grids are also identified as promising areas for investment in the Nigerian solar energy sector.
The nation has a significant energy deficit, with current grid capacity at 5.4GW while consumption needs average 12.9GW. This presents investment opportunities in the Nigerian energy market, particularly in sustainable energy projects. Experts believe that Nigeria has the potential to tap into renewable energy sources, such as solar, given its economic capacity and environmental conditions. One promising area for investment is the development of large-scale solar power projects. Access to funding is crucial for the development of renewable energy projects in Nigeria. The Sustainable Energy Fund for Africa (SEFA) managed by the African Development Bank provides catalytic finance to unlock investment in sustainable energy projects.
The Redeployment Challenge
Transitioning workers from the fossil fuel to the renewable energy sector requires several strategies. One key strategy is to reduce fossil fuel subsidies, which currently hinder the shift to renewable energy. Another important approach is to invest in expanded education, training, and certification programs to develop a skilled workforce that can support the new energy economy. Additionally, efforts are being made to retrain and repurpose local workers to take advantage of the opportunities in the clean energy transition.
Governments and utilities are also taking steps to minimize the build-out of new gas and mitigate the impacts on customers and ratepayers during the transition. Just transition is possible, but it requires concerted efforts to support workers and communities affected by the shift from fossil fuels to renewable energy. There are various training programs and initiatives available to support workers transitioning from fossil fuel to renewable energy. The Scottish government has implemented a Transition Training Fund that provides grants for retraining workers in the oil and gas industry. Iron & Earth offers Renewable Skills training programs that upskill fossil fuel industry workers in solar and wind energy. Additionally, there are clean energy skills training programs and reskilling initiatives aimed at transitioning workers from coal to renewable energy. The clean energy transition presents an opportunity to retrain and repurpose local workers. The transition from fossil fuel to renewable energy sectors presents several challenges for workers. One challenge is the geographic concentration of fossil fuel jobs, which creates a significant influence on local economies and public opinion. Weak governance, poorly targeted subsidies, and inadequate support can paralyze the energy transition in many countries. Additionally, competition from low-cost fossil fuels poses a significant challenge for renewable energy. On the other hand, the energy sector already faces difficulty hiring qualified talent to keep up with the demand for clean energy. Overall, while the shift away from fossil fuels is necessary for combating climate change, it will have economic impacts and require proper alignment of skills with new jobs.