Some of the biggest consumers of Nigeria’s crude oil such as Spain, Netherlands and France will no longer consider petrol as a priority in the next 14 years, thanks to an ambitious European Union plan to speed up the switch to zero-emission electric vehicles (EVs) as part of a broad package of measures to combat global warming.
Africa’s biggest oil-producing country is yet to come to terms with the reality of a post-oil economy as she lives as though the demand for black gold will be there forever. This is despite a rising push for electric vehicles sales across Europe, which may undermine Nigeria’s most valuable export.
Oil-dependent economies like Nigeria with markets in Europe where electric car gospel is gaining more momentum, especially in Spain, Netherlands, France, Italy, and Germany as flows to the continent stood close to 900,000bd on average in 2020, according to London–based global information provider.
As part of a raft of new legislation, the EU has announced plans to completely phase out greenhouse gases from the transport sector by 90 percent by 2050 in order to meet the goals of the European Green Deal.
It also proposed a 100 percent cut in CO2 emissions by 2035, which would make it impossible to sell new fossil fuel-powered vehicles in the 27-country bloc.
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“This is the sort of ambition we’ve been waiting to see from the EU, where it’s been lacking in recent years,” said Helen Clarkson, chief executive of the Climate Group, a non-profit group that works with business and government to tackle climate change.
To boost Electric Vehicles sales, Brussels also proposed legislation that would require countries to install public charging points no more than 60 kilometres (37.3 miles) apart on major roads by 2025.
It foresees 3.5 million public charging stations for cars and vans by 2030, rising to 16.3 million by 2050.
“The transition to electric vehicles is going much faster than anybody had ever anticipated, but then we are under an obligation to create the right incentives for that,” said Frans Timmermans, the EU’s head of climate change policy. “So, the charging infrastructure should be there.”
The Commission estimates $95 to $142 billion will need to be spent on public and private chargers across the EU by 2040.
IHS Markit said in a report on Tuesday that if the EU raised its CO2 emission reduction targets to 50 percent by 2030, it would bring new fossil-fuel car sales across the bloc down to virtually zero by then.
“It is clear that if these stretch goals are implemented as solid proposals to be voted into legislation, that carmakers that have been bolder and invested heavily earlier on in electrification will have a significant advantage,” IHS said.
Although full electrification is a long way off, many carmakers have announced investments in electrification, partly in anticipation of tougher EU emissions targets.
Last month, Volkswagen AG said it would stop selling cars with combustion engines in Europe by 2035, though later in China and the United States.
A Dutch-domiciled multinational automotive corporation, Stellantis said last week it would invest more than 30 billion euros by 2025 on electrifying its line-up.
An American consulting firm AlixPartners estimates carmakers and suppliers globally will invest $330 billion in electrification from 2021-2025, up 41 percent from its estimate of $250 billion for 2020-2024.
Some analysts question Nigeria’s inability to articulate a strategic response to the reality that electric vehicles will be the next disruptive market force.
Worries over the future value of crude oil are particularly acute in Nigeria, where over 90percent of export value is generated by fuels, oils, and distillation products. Analysts fret that a rise in the sales of electric vehicles (EVs) across Europe and Asia will undermine its most valuable export.
“I shudder when Nigerian lawmakers still shout their voices hoarse on the relevance of oil rather than challenging themselves in building knowledge-driven economies which can truly create wealth,” Niyi Awodeyi, CEO at Subterra Energy Resources Limited, said.
Most experts say the current PIB tends to focus on solving past problems rather than meeting future challenges, or as the Columbia Centre for Sustainable Investment (CCSI) described it “the PIB is a small step when Nigeria needs a leap.”
“The PIB, ultimately, fails to account for climate change, acknowledge the Paris Agreement, and address the need for diversification to adequately prepare Nigeria for the energy transition that is already underway,” CCSI notes in its blog.
While at present it may be hard to imagine a time when electric cars dominate the pollution-choked streets of Lagos, most analysts say Nigeria would do well to prepare for a future where the price of crude oil no longer tops the global economic agenda.
