By Sam Agbavem and Eunice Sampson
There is no gainsaying the fact that Imo State is blessed with a large gas deposit, which can be harnessed to power its industries and households. But will Imo State be able to utilize this resource, or will it be a case of a stranded asset? What is the place of gas as a source of energy in the short and long term, and how can Imo State leverage this opportunity to secure a better future for its economy and people? These are pressing questions occasioned by the global quest for sustainable energy transition.
The 26th meeting of the UN Climate Change Conference of the Parties, commonly referred to as COP26, which held in Glasgow in November 2021, brought together 120 world leaders and over 40,000 registered participants, to accelerate action towards the goal of the Paris Agreement (COP21) and the UN Framework Convention on Climate Change (UNFCCC). The Paris Agreement and the UNFCCC both seek actions to combat climate change through finance, adaptation and mitigation efforts directed at the control of Greenhouse Gas (GHG) emissions that cause global warming, with the overarching goal to maintain global temperature to below 1.50.
To achieve the 1.50 target requires energy transition – a drastic shift from fossil-based systems of energy production and consumption (which is a major contributor to GHG emissions, principally responsible for global warming and climate change) to cleaner energy alternatives. Energy transition is the solution to a cleaner energy future and spans from renewable energy sources (wind, solar, and hydro) to the adoption of emission-reducing natural gas. Although, natural gas is considered a fossil fuel, switching from coal-to-gas can significantly reduce emissions and can contribute to the gains of energy transition for most developing countries that are rich in natural gas by leveraging natural gas as the transition starter.
It is estimated that energy transition – whether to renewable energy or natural gas – will bring socioeconomic benefits such as significant reduction in GHG emissions, decrease in the rate of depletion of natural resources, enhanced industrialization, reduced health impacts from air pollution, employment growth, socioeconomic development, as well as significant contribution to the attainment of the UN Sustainable Development Goals (SDGs).
However, the desire to shift to cleaner energy is an ambitious one that poses substantial cost and technology challenges and requires huge financing which most developing countries in Africa may struggle with, especially when considering their socioeconomic indexes.
For example, most countries in sub-Saharan Africa still lag behind the rest of the world when it comes to social and economic development, despite available natural resources in some of these countries. For example, Nigeria is richly blessed with abundant resources, including natural gas, but is still one of the poorest countries in the world, with a high youth unemployment rate put at 53.4% according to figures published by Trading Economic; steadily growing population; and rapid urbanization of cities that lack the critical infrastructures needed to support basic living.
The same is true for Imo State, which is yet to leverage its gas resources to transform its economic and industrial fortune. As democracy takes firm roots in the State, stakeholders are increasingly eager to see good governance translate to enhanced socioeconomic wellbeing for individuals, households, and businesses. Hence, the time to drive rapid industrialization and transformative socioeconomic development leveraging the State’s natural gas resources is now.
Natural gas is a relatively clean burning fossil fuel that can be considered as a bridge fuel in the ongoing energy transition, by displacing the more carbon-intensive fossil fuel energy system. This can be a good starting point for developing countries because the cost and technology required for transiting to large-scale renewable energy system is still mostly challenging, and efforts to mitigate transition risks and the longer-term implication of the transition is not yet fully articulated. Natural gas can, thus, play a significant role as an essential bridge to a more sustainable and reliable energy future, capable of addressing economic development priorities for these countries.
With the unique role that natural gas can play in energy transition, a global energy demand that is projected to increase by about 20% by 2045; and China and India – two of the fastest growing economies – projected to shift their energy mix towards natural gas in the coming decades; Imo State’s gas deposit presents a unique opportunity to tackle multiple development priorities and drive industrialization and socioeconomic development in the State. This is achievable if this energy resource is harnessed sustainably through innovation and technology, developing transformative business models that will promote optimal and efficient use of the natural gas, and formulating policies and incentives that will support natural gas as a mainstay of the State’s economy.
To achieve this, the State government should elicit the support of and partner with the Federal Government which is vested with the control of all minerals, oils, and gas resources in Nigeria. The State could also leverage the option of setting up a gas exploration company driven by public-private partnership arrangement.
The goal of developing the State’s gas reserves is one that will support the Net-Zero Target proposed by President Muhammadu Buhari during the COP-26 conference and could also help in financing part of the country’s energy transition plans (especially as gas has been declared as the nation’s transition fuel and a viable pathway to a net-zero carbon emission), while addressing energy poverty and power supply challenges within the State and beyond.
Partnering with the Federal Government, leading gas exploration and development companies and other key stakeholders to commence large-scale development of the State’s gas reserves can help spur rapid industrialization and socioeconomic development in the State, improve power supply, create jobs for unemployed youths, enable incubation and growth of small and medium sized businesses and create sustainable wealth for the State.
Important in this regard is the development of a state-level gas masterplan that will ensure that the State’s wealth of resources translates into tangible gains for its people, and that accrued revenue and other benefits from the exploitation of the gas reserves is fully maximized to grow the economy, develop critical infrastructure, build capacity of citizens through technology and knowledge transfer, foster the growth of an entrepreneurial ecosystem in an inclusive manner, and develop and adopt a model that will support the State’s energy transition plan, with detailed roadmap and clear, actionable goals of what needs to be done in the immediate to long-term.
Funding this plan would require actioning the gas masterplan for quick wins that would attract investments, leveraging local and international investment opportunities and global ESG/energy transition and decarbonization support funds. Eligibility criteria for such funds require the State to develop and adopt sustainable governance structures, polices, and practices, demonstrate a strong commitment to ESG/sustainability, and integrate a value proposition for all stakeholders to foster support and drive active participation.
This calls for urgent action by the State government to take necessary steps, first by making a strong case for the State to actively participate in its gas development as a panacea for sustainable socio-economic development and wealth creation, and also, by creating a conducive investment and regulatory environment for local and global investors to drive this vision.