NNPC’s clean energy plan opens opportunity for investors

The Nigerian National Petroleum Company (NNPC) says it will begin to invest in new commercial-ready technologies that can meet energy needs and help fight climate change impacts, a development that signals opportunities for clean energy investors.

Margareth Okadigbo, chairman of the NNPC, in a speech at the 28th World Gas Conference in the Republic of Korea, on Wednesday, unveiled the corporation’s plan to decarbonise its gas operations.

Okadigbo said the corporation plans new projects for carbon reduction, and increasing efficiencies, while maintaining some degree of flexibility to adapt technologies to geographical and social, cultural realities.

“We are taking a deeper look into commercial-ready technologies that can be leveraged to meet both energy needs and climate-smart developments such as low carbon fuels, hydrogen, methanol, carbon capture, and biofuels,” she said.

Over the past five years, the clamour to cut emissions in oil production to halt the rampaging impacts of climate change is forcing energy producers to rethink their strategies as pressure from their shareholders mounts.

Oil majors such as Shell and Total are no longer willing to be known as just oil and gas companies; they are rebranding into integrated energy companies and matching the strategic shift by announcing net-zero targets.

Net-zero is used to describe the state in which the greenhouse gases going into the atmosphere are balanced by removal from the atmosphere.

“Two years ago, we began the biggest transformation in our company’s history that spans more than 110 years,” Federica Berra, senior vice president, integrated gas and power at BP, said during a panel session at the event.

“We now have a new purpose to reimagine energy for our people and our planet, and we have a new ambition to get to net-zero by 2050 or sooner and help the world get there,” she said.

This new sense of purpose shared by major oil companies which the NNPC is committing to could open up the space for clean and new energy models and investments in Nigeria, as has been true across the world.

In the case of the NNPC, Okadigbo said the corporation is road mapping for the future, to make sustainability a key consideration in all future projects.

According to researchers at London-based data, insights, and consulting firm, Kantar, sustainability is a huge commercial opportunity.

“Trends in sustainable behaviour and living have gathered momentum at the turn of this decade and are now becoming the focal point for businesses,” analysts at Kantar said.

Trends show this is now the case in the energy sector where investments are shifting to new energy sources like hydrogen.

Francesco La Camera, director-general of the International Renewable Energy Agency, a 180-member country intergovernmental organisation mandated to facilitate cooperation and advance knowledge and adoption of renewable energy, said hydrogen could prove to be a missing link to a climate-safe energy future.

La Camera said in a recent release that hydrogen was clearly riding on the renewable energy revolution with green hydrogen emerging as a game-changer for achieving climate neutrality without compromising industrial growth and social development.

“But hydrogen is not a new oil. And the transition is not a fuel replacement but a shift to a new system with political, technical, environmental, and economic disruptions,” said La Camera.

Okadigbo alluded to NNPC’s quest for new energy forms and selecting low-hanging fruit projects, such as converting industry from raw energy to climate-smart technologies.

“We are also determining what can be done in-house with local technology champions to deepen the desire for climate-smart technologies,” she said.

Climate-smart technologies (CSTs) and practices are activities that help farmers adapt to the effects of climate change. CSTs help farmers address climate change issues such as extreme drought, extreme precipitation, and changes in seasonal timing.

In parts of East Africa, CSTs interventions have come in the form of new approaches to soil management, drought-tolerant maize, dairy development, innovative ways to farming catfish, carbon finance to restore crop fields, and waste-reducing rice thresher, rainfall forecasts, and incentive system for low-carbon agriculture.

This is important because, as Okadigbo said, the NNPC is planning for carbon offsets from agricultural and biomass energy projects to be considered as part of the future planning kit for their decarbonising effort.

Carbon offsets are considered evidence of an activity that avoids, reduces or removes quantifiable volumes of greenhouse emissions from the atmosphere and offsets can therefore be bought and sold as legal ownership of that emissions reduction is tradable allowing it to be transferred and used to balance out offset omissions generated elsewhere, she explained.

She said: “Our view at NNPC is that carbon offsetting is effective, but it is more effective if it is done in addition to carbon reduction, and not just a stand-alone.

“Once the strategies are in place, carbon offsets can be employed as a faster way to ensure reductions in carbon emissions. So for example, renewable energy and aviation offsets are a good start to any effective clean energy strategy.”

Last year, Nigeria earned one million euros from cutting carbon emissions in its oil and gas production in joint projects between TotalEnergies and the National Petroleum Investment Management Services, an NNPC subsidiary.

Carbon credits are earned when a project is registered as a Clean Development Mechanism project under the United Nations Framework Convention on Climate Change, earning the nation carbon credits that can be cashed with the World Bank or through the European Union Emissions Trading Systems (EU ETS).

Set up in 2005, the EU ETS is the world’s first international emissions trading system. It has since continued to inspire the development of emissions trading in other countries and regions.

The EU supports these efforts through knowledge exchange and capacity-building activities. The EU also considers opportunities to link the EU ETS with other compatible systems.

This follows the agreement reached by 196 countries at the COP 21 in Paris commonly called the Paris Agreement in 2015, where they committed to cut back on carbon emissions.

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Okadigbo said cutting emissions from the source is more effective, adding, “Carbon offsets can play a great role in helping to fund environmental projects if they are properly certified in accordance with recognized practice by competent organisations.”

“This is a reason why the promise of carbon offsets as a tradable tool for funding environmental projects, especially in Africa is challenging. Nevertheless, we see a strong future for offsets, especially as tradable certificates for heavy industry and aviation,” she said.

Investors who leverage CSTs in agriculture and partner with the NNPC will see value through trading carbon credits as well as helping to ensure food security in Nigeria.

Okadigbo also said the corporation would help to declutter the regulatory landscape by supporting regulations that encourage clean technologies.

“We are also embracing digitalization for asset and pollution monitoring, metering, data measurement, and integrity performance,” she said.

Within the last five years, industries and governments are taking the responsibility to support the call for an energy transition to more climate-smart technologies.

This responsibility has changed the way governments plan investments in energy, and infrastructure, with some countries, especially in Europe before the Russian invasion of Ukraine, having developed clear policies to fight climate change.

“For us the NNPC, our partners, and the government, this means taking up sustainability and decarbonisation efforts to new levels,” Okadigbo said.