Policy, Legislative and Regulatory Challenges in Promoting Efficient and Renewable Energy

POLICY, LEGISLATIVE AND REGULATORY CHALLENGES IN PROMOTING EFFICIENT AND RENEWABLE ENERGY FOR SUSTAINABLE DEVELOPMENT AND CLIMATE CHANGE MITIGATION IN NIGERIA

BY

PROFESSOR MUHAMMED TAWFIQ LADAN (LL.B, LL.M, Ph.D)

PROFESSOR OF LAW,

DEPARTMENT OF PUBLIC LAW, FACULTY OF LAW,

AHMADUBELLOUNIVERSITY, ZARIA, KADUNA STATE, NIGERIA

A PAPER PRESENTED:

THE 3RD SYMPOSIUM AND 2ND SCIENTIFIC CONFERENCE OF ASSELLAU

ORGANIZED BY:

THE UNIVERSITY OF NAIROBI, FACULTY OF LAW/CASELAP, NAIROBI, KENYA

VENUE:

UNIVERSITY OF NAIROBI, KENYA

DATE:

23TH – 25THMARCH, 2009

POLICY, LEGISLATIVE AND REGULATORY CHALLENGES IN PROMOTING EFFICIENT AND RENEWABLE ENERGY FOR SUSTAINABLE DEVELOPMENT AND CLIMATE CHANGE MITIGATION IN NIGERIA

BY

PROFESSOR MUHAMMED TAWFIQ LADAN

INTRODUCTION

Nigeria’s indigenous energy resource development reveals that the country’s oil reserves (6th largest in the world) were put at 34 billion barrels for 2004 and 40 billion barrels by 2010, giving an effective growth rate of 2.746% per annum. At this growth rate, the reserves will reach 68.7 billion barrels by 2030, or double the 2004 value. Intense exploration activities are taking place in the off-shore fields from the Niger Delta, while the potentials of the inland Benue and ChadBasins are yet to be exploited. By 2000, 53.5% of natural gas reserves of 159 trillion sq. cubic ft (9th largest in the world) were associated gas. While the associated gas reserves will increase with oil reserves, there will be increasing activities in exploration for gas only. Corresponding substantial endowments of bitumen (31 billion barrels of oil equivalent and 2nd largest in the world), coal, hydropower and solar energy, as well as plans for their development, exist.1

Energy is essential for development. No developing society can hope to achieve economic sustainability without adequate energy supplies. Virtually every aspect of economic and social activity demands energy.

The unavailability of modern forms of energy to some two billions of the world’s population, and inadequate supplies to an estimated additional two billions more people, is a major challenge to the achievement of the poverty, gender and health objectives of the UN Millennium Development Goals and the Plan of Implementation of the World Summit on Sustainable Development.

At the same time, energy generation using fossil fuels is the principal source of greenhouse gas emissions that are causing global warming. The mining and processing of fossil fuels can also endanger the lives of miners, cause severe land disruption and pollute land, air and waters. Furthermore, burning fossil fuels emits nitrogen and sulphuric oxides that are themselves toxic and are the precursors of urban smog and acid rain, while coal burning power stations are responsible for mercury emissions that bio accumulate in ecosystems, presenting a threat to human health as well as the environment.

Providing the energy essential for development while minimizing environmental hazards is one of the principal challenges of the twenty-first century. Energy efficiency offers perhaps the greatest potential to greatly reduce the amount of polluting energy needed to achieve current and future development targets. By eliminating waste, efficiency can often be accomplished at a profit or with a very short payback period of a year or two. Renewable energy, in the form of energy produced from solar, wind, sustainable managed hydro, geothermal and biomass resources, offers the potential to significantly displace the need for polluting fuels. These renewable resources are emphasized in the Plan of Implementation of the World Summit on Sustainable Development.

This paper therefore contends that while much has been written about the science, technology and policies for promoting energy efficiency and renewable energy, little has been written about the legislative and regulatory options necessary to implement these technologies and policies that make a reality in practice. By promoting clean and efficient energy use at the legislative and regulatory levels, governments can ensure that all stakeholders have the opportunity and incentive to adopt new practices that will help to mitigate climate change2 and reduce pollution while keeping the path of economic and social development.

It is against this background that this paper seeks to realize the following objectives: -

1. To underscore the importance of efficient and renewable energy to produce electricity for the mitigation of climate change and sustainable development in Nigeria;3
2. To provide an overview of the policy, legislative and regulatory measures available to promote energy efficiency and renewable energy in Nigeria;
3. To highlight the challenges and strategies to overcome the barriers to use and regulation of renewable and efficient energy for electricity in Nigeria.

PART ONE: -THE IMPORTANCE OF EFFICIENT AND RENEWABLE ENERGY TO PRODUCE ELECTRICITY FOR THE MITIGATION OF CLIMATE CHANGE AND SUSTAINABLE DEVELOPMENT IN NIGERIA

1.1Background

Coal has been superseded as the chief source of Nigeria's electric power by oil, natural gas, and newly developed hydroelectric facilities. In 1969, the 11,500 MW Kainji Dam, 100 km (62 mi) north of Jebba, was inaugurated. The N£87.6-million dam was built with loans from the IBRD (N£34.5 million), the United Kingdom, the United States, Canada, Italy, and the Netherlands. The 560 MW Jebba plant on the Niger, the 600MW Shiroro plant on the Kaduna, and a 1,320MW thermal station at Igbin, near Lagos, were also expected to add to hydroelectric capacity. Hydroelectric production accounted for 35.9% of total power generation during 2000, thermal for the rest, based almost entirely on oil or gas for fuel. Installed capacity in 2001 totaled 5,888,000kW. Electricity produced in 2000 totaled an estimated 15.9 billion kWh. About 40% of the population, and only 10% of rural households, had access to electricity as of 2002.4

However, in a more recent 2006 National Survey, more than four in every five households (85.3 per cent) in the urban areas reported having access to electricity, which was more than the 54.1 per cent national figure. Majority of the southern zones recorded high access to electricity. More than 60 per cent of households in the South-East had access to electricity. South-South’s figure was 61.2 per cent and South-West’s, 78.1 per cent. The households in the North-East had the least access to electricity among the six zones. The study further revealed that 38.1% of the rural populace, 12.1% of the rural poor and 29.8 of the urban poor populace in Nigeria had access to electricity.5

For Nigerians, the quest for uninterrupted electric power supply has been a long story of dashed hopes and expectations. Despite the promises by successive administrations in the country to accord priority to the provision of efficient and renewable energy to produce adequate electricity for sustainable development, Nigerians have continued to experience epileptic electric power supply for their different needs.6

1.2Energy Needs for Different Economic Activities in Rural Areas of Nigeria7

The basic needs of the poor, rural inclusive are jobs, food, health services,education, housing, clean water and sanitation. Energy plays an important role inensuring these services. The more accessible it is, the higher the consumption by human beings, the poor inclusive.

Basic energy services are cooking, lighting and heating, whereas the corresponding energy consumed per capita per year in MJ are 948, 46, 46, totaling 1,040 MJ per capita per year. Supply strategies usually are linked to economic, social and environmental concerns.

Rural energy resources in Nigeria can be classified as traditional and commercial. Traditional energy resources such as fuelwood, cow dung, agro-residues, charcoal, etc. Commercial energy resources such as kerosene, candles, torches, gas (LPG) and electricity.

The real challenges in primary energy mix well into the 21st Century for energy sustainability by World Energy Council (WEC) are how to develop cleaner combustion technologies and how to cover the real cost of fuels and energy services.

Today, WEC’s regional programs in Asia, Africa, Latin America and the Caribbean, and Central/Eastern Europe are focused on facilitating provision of access to a minimum of 500 kWh of reasonably priced electricity or its equivalent to every person in the world by 2020.

The energy projects that will contribute to this will bring commercial energy to a new market such as urban poor/rural poor, in a developing country, like Nigeria, in a way that quantifiably reduces or eliminates emissions at the local, regional, or globallevels.

Broad patterns of global energy use in rural areas, gives:

1. Households – 85% of total, traditional energy, with end-use in cooking and heating.
2. Agriculture – 2-8% of total, commercial energy, with end-use in the powering of mechanical equipment and pumps.
3. Rural Industries – 10% of total, mixture of traditional and commercial for motive power use usually.

The Energy Commission of Nigeria (ECN) Rural Energy Surveys8 show that the energy consumption sectors are similar to the broad global lines discussed above, with addition of other services.

One influencing factor in energy consumption is the income-level. Low income level consumes energy primarily in cooking, whereas medium income level will add lighting to its consumption and the high income level will add water heating, refrigeration and cooling to the other two end uses.

Another interesting observation from the analysed data is the absence or inadequate skills in the Local Government Authorities for sustenance of the energy systems. This is because thetraditional energy conversion technologies in use are rudimentary, limited incapability and generally inefficient. This raises the need for training and capacitybuilding for the sustenance of energy conversion technologies of modern energyservices. Energy end-use are primarily and on the average for lighting, cooking,drying, heating, transportation, agriculture and industrial activities.

Economic activities are location specific with common ones such as sawmill, brickmaking, garri processing, bakery and furniture making.

The end-use energy requirements for different economic activities in the rural areas are given in table 1 below:

Table 1: - Economic Activities & Energy requirements in the Rural Areas9

S/N / ACTIVITY / USE / KW
1. / Agro-Processing / Flour grinding
Oil expelling
Crop drying
Threshing / 1-2
2-5
-
-
2. / Small-Scale Industry / Saw-milling
Wool and Cotton Processing
Stone Crushing / 10-30
5-25
5-25
3. / Household / Lighting
Refrigeration
Cooking
Water-pumping
Ironing
Radio/TV / 0.2
0.3
0.4 (heat storage cooker)
0.5-1
0.5
0.1-0.3

The urban poor also are dependent on small-scale manufacturing and repair services for income. Fuelwood is still mainly used for small-scaleproduction of bread and other products, thereby increasing the problem ofenvironmental pollution. However, some of these enterprises may becomeincreasingly sustainable and economical if modern energy services are used. Theuse of modern energy services would improve the quality of life and livelihoods andincrease potentials for income generating activities.

Table 2 below reveals the National Energy Consumption pattern as reported by a recent NationalEnergy Study for the industrialization of Nigeria (2006-2030)10 which took into consideration the thinking of government in terms of the overall economy and the energy sector.

Table 2: -Summary of National Energy Consumption Computations for the Household Sector11

Fraction of households with A/C / 10.71%
Fraction of households with Water Heater / 7.14%
(Gas)LPG / Kerosene / Coal / Fuelwood / Electricity
% HH Using an Energy Type for Cooking / 12.50% / 76.79% / 1.79% / 67.86% / 7.14%
% HH Using an Energy Type for Water Heating / 8.93% / 67.86% / 0 / 66.07% / 25.00%
% HH Using an Energy Type for Lighting / 0 / 87.50% / 0 / 0 / 42.86%
Ave Annual Energy Cons. Per HH
For cooking (Unit/household) / 22.06 / 34.79 / 2275.75 / 21.27
For water heating (Unit/Household) / 3.47 / 7.86 / 785.61 / 132.66
For Lighting (Kg/Household) / 0 / 52.7 / 0 / 291.75
National consumption per yr
For cooking (Unit*) / 1.65x108 / 6.59x108 / 4.31x1010 / 4.03x109
For water heating (Unit*) / 2.60x107 / 1.49x108 / 1.49x1010 / 2.51x109
For Lighting (Unit*) / 9.98x108 / 0 / 5.53x109
For A/C (Unit*) / 2.20x109
For Appliances (Unit*) / 2.90x109
Total (Unit*) / 1.91x108 / 1.81x109 / 2.03x107 / 5.80x1010 / 1.35x1010
National Consumption (TOE)
For Cooking (TOE) / 178.63 / 548217.3 / 1.40x1010 / 89811.29
For Water Heating (TOE) / 28.09 / 123860.2 / 4.83x109 / 560033.5
For Lighting (TOE) / 830358.9 / 0 / 1231697
For A/C (TOE) / 0 / 0 / 490974.6
For Appliances (TOE) / 645586.2
Total (TOE) / 206.72 / 1502437 / 1.88x1010 / 3018102

* National units of the fuels are as follows: (Gas) LPG (kg), Kerosene (litre), Coal (kg), Fuelwood (kg), Electricity (KWh).

1.3Implications of Climate Change for the Energy and Industrial Sectors of Nigeria.12

Climate change, and more specifically the carbon emissions from energy production and use, is one of the most troubling problems facing society today. Climate change engages the energy sector particularly closely because energy is central both to the problem and to its solution.

Hydropower generation is the energy source mostlikely to be affected by climate change. It is sensitiveto the amount, timing, and geographical pattern ofprecipitation, as well as temperature. There is thepotential for more intense rainfall events (which wouldrequire more conservative water storage strategies toprevent flood damage), greater probability of drought(less hydroelectric production), and less precipitation(less water available during warm months); all ofwhich point to less hydroelectric capacity at currentpowerhouses.

Reduced flows in rivers and higher temperaturesreduce the capabilities of thermal electric generation.Higher temperatures also reduce transmissioncapabilities. Hydropower generation will be affectedby increased run-off (and consequent siltation).Excessive drought will lead to higherevapo-transpiration, which adversely affects watervolume, and will thus reduce hydroelectric capacity.Excessive drought, which is likely to affect forestcover, will also pose problems for fuel wood supply.Oil and gas production, especially in coastal areas,will be negatively affected by increased wind andwave action, heavy precipitation, and shorelineerosion. It will also be affected by the loss of oil andgas extraction infrastructure due to sea-level rise andcoastal inundation. Climate change-induced extremeweather events such as windstorms, floods andtornadoes (which can topple transmission towers andhundreds of kilometres of power lines) will exacerbatethe rate of failure of transmission systems of electricutilities. The cost implications are prohibitive. Yetdemands for both space-cooling and space-heatingcan only increase, placing further dependence on thisalready burdened industry.

Two categories of industries were identified as beingvulnerable to climate change: (1) industries withactivities that are dependent on climate (construction,transportation operations and infrastructure, energytransportation and transmission, offshore oil and gasproduction, thermal power generation, industries,such as paper mills, that depend heavily on water,pollution control,coastal-sited industry, and tourismand recreation), and (2) sectors in whicheconomicactivity is dependent on climate-sensitive resources(agro-industry, biomass and other renewable energyproduction).

Industries, generally, may be exposed to direct orindirect impacts of climate change. Such potentialimpacts of climate change will depend on a number offactors, which include:

1. The geographic location of such industries (Coastal and northern dry belt zones).
2. The nature of resource inputs used by the industry(which areclimate-dependent (such as agro resources)).
3. The dynamics of consumer behaviour.
4. Government policies pertaining to climate change.The imposition of carbon taxes, forexample, would increase the cost of productioninputs.
5. Other industries: such as construction, housing,transportation, energy generation and distribution,are all affected by the incidence of extremeweather and weather-related conditions.

1.4Energy Efficiency and Renewable Energy13

Energy efficiency measures are a proven means to reduce dependence ontraditional energy resources by using them more efficiently. With respect to electricity supply, forexample, the typical power plant uses only 30% of its fuel for producing electricity; the remaining70% of the fuel produces heat that generally is exhausted through tall stacks into the atmosphere.

If the waste heat is used instead for additional power production, for industrial processes or forheating buildings, the efficiency of the fuel use can be more than doubled, often to as much as70%. Similarly, an industry that uses large amounts of heat in its processing often can produce verylow cost electricity in conjunction therewith. The technology for achieving these savings is called“combined heat and power” or “cogeneration.” Building efficiency and appliance efficiencymeasures can save a large percentage of the fuel required for these large-consuming applications.

Energy from the light of the sun (photovoltaic) can be used to produce electricity.While the equipment is expensive, maintenance requirements are minimal and there are no fuelcosts. They are far less costly for rural areas not covered by grid electricity than building new powerplants and grid distribution systems. Energy from the heat of the sun (solar thermal) can be usedeconomically to heat water and homes. Both these forms of solar energy also can be used in largearrays to produce central station power.

Energy from biomass (agricultural and wood wastes) is particularly advantageous for developing countriesbecause local products and labor can be employed. Energy crops can be grown, as demonstrated inBrazil, to produce ethanol to fuel vehicles and industrial processes, avoiding the need to import oil.

Hydroelectric energy for electricity is the most widely used renewable energy resource today with many developing country applications. Construction of large hydroelectric dams has substantial problems of displacement of populations and agriculture and of siltation that diminish their usefulness over time of displacement of populations and agriculture and of siltation that diminish their usefulness over time. Decay of plant life in the dam reservoirs produces significant amounts of carbon dioxide. The effectiveness of the dams can be serious impaired by droughts, leaving insufficient flows to produceexpected electricity outputs, as demonstrated recently in Brazil where electricity had to be rationedbecause of drought-related water shortages. Still, hydropower produces no other pollutants, requireslittle maintenance and is often economically advantageous. Small dams and installation of turbinesin fast-flowing rivers without the use of dams can be very advantageous, minimizing environmentalproblems. Where dams already exist, adding power generation also is attractive.

Geothermal energy from the heat of the earth, where available, can be used economically toproduce hot water and steam for electricity.

1.4.1Brief Overview of Rural Applications of Efficiency and RenewableEnergy14

Some who currently lack access to modern electricity in developing countries will be served bycentral grid connections, connecting villages and remote areas to a national grid often ownedand operated by a public utility. This tendency to incrementally extend grid to remote communities,however, increases costs particularly for those areas that are farther from the national grid.