Advancing Decarbonisation in Nigeria’s Transport Sector for a Net-Zero Future

GUEST COLUMNIST By Dr. Ebenezer Onyeagwu

The transport sector is a key growth enabler for most economies due to its crucial role in the manufacturing and logistics value chain. Consequently, policymakers are consistently working to boost transport efficiency, which includes ensuring access to affordable and reliable energy sources for this critical sector. As nations race to meet their commitments to address climate change in line with the United Nations Sustainable Development Goals (SDGs) and the Paris Climate Agreement, transport sector decarbonisation has emerged as a major consideration for policymakers. According to the United Nations Environment Programme, the sector contributes roughly 25 per cent of energy-related greenhouse gas (GHG) emissions, and its share could reach 40 per cent by 2030 without deliberate actions towards decarbonisation.

Despite Africa contributing approximately 4 per cent to global GHG emissions, Nigeria and other African nations must carefully balance decarbonisation efforts with strategic development objectives in key sectors, including transportation. At COP26 in Glasgow, Scotland, Nigeria announced a 2060 net zero target. This commitment builds on the country’s updated Nationally Determined Contributions (NDC) under the Paris Climate Agreement, where the nation reiterated its unconditional economy-wide target to reduce emissions by 20 per cent relative to business-as-usual by 2030, increasing its conditional target from 45 per cent to 47 per cent. To support the achievement of the country’s climate targets, the Climate Change Act was signed into law in November 2021. The enactment of the Climate Change Act, providing a legislative backbone for climate governance and emissions mitigation, underpins these targets.

To realise its net-zero ambition, Nigeria has introduced the Energy Transition Plan (ETP), an overarching strategy detailing timelines and mechanisms for reducing emissions across pivotal sectors, including power, cooking, oil and gas, transport, and industry—collectively responsible for 65 per cent of the nation’s emissions. The ETP anticipates a substantial decline of about 97 per cent in transport sector emissions, propelled by the adoption of electric vehicles in the passenger car segment by 2060.

Nigeria’s ETP is unique, given its alignment with “Just Transition”. This concept highlights the need for countries to pursue decarbonisation efforts in ways that create opportunities for segments of the population that will be disproportionately impacted by low carbon transition. The Federal Government seeks to leverage the ETP to lift millions out of poverty while playing a leading role in Africa by modelling fair, inclusive and equitable energy transition on the continent. Consequently, the ETP designates gas as a “transitionary fuel” as the Federal Government seeks to merge its two strategic priorities of economic development and climate action.

Embracing a gas-centric energy transition underscores the contribution of the resource to the Nigerian economy. The strategy opens the door for deepening domestic gas utilisation, especially in carbon-intensive sectors like transport. The launch of the Presidential Compressed Natural Gas Initiative (PCNGI) to facilitate the adoption of CNG, particularly in the transport sector, is a development that aligns with Nigeria’s gas-based energy transition strategy.

The Federal Government estimates that achieving net zero by 2060 will necessitate an outlay of $1.9 trillion, which includes an additional $410 billion over routine expenditure. Despite the formidable financial implications, optimism prevails, buoyed by the identification of a $23 billion investment prospect within existing national programmes and projects that are directly related to “Just Transition”. The Nigeria Energy Transition Office is actively seeking to attract the requisite investment and support to expedite the nation’s energy transition, with a significant focus on decarbonising the transport sector—a vital step in Nigeria’s ambitious journey towards a net-zero future.

In conclusion, Nigeria’s journey towards a carbon-neutral future is marked by ambitious targets and pragmatic strategies. The Energy Transition Plan reflects a commitment to global climate goals while addressing the nation’s unique socio-economic challenges. As the transport sector embarks on a transformative decarbonisation process, supported by the strategic use of natural gas and the promotion of electric vehicles, Nigeria is assuming a leading position as a frontrunner in sustainable development in Africa. The success of this endeavour will not only contribute to the global fight against climate change but also herald a new era of inclusive economic growth and environmental stewardship for the country and the African continent at large.

Dr. Ebenezer Onyeagwu is the Group Managing Director/CEO of Zenith Bank Plc and Chairman of the Body of Banks’ CEOs in Nigeria.

This opinion was first published in the Zenith Economic Quarterly Vol. 19 No. 4 October 2023, in his column “CEO Insight”.