• Thursday, June 20, 2024
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Nigeria’s renewable energy sector has immense potential – Pyatt, US envoy

Nigeria’s renewable energy sector has immense potential – Pyatt, US envoy

The United States of America (USA) says it wants to be Nigeria’s preferred partner in energy transition and security. During a recent visit to Nigeria, US Assistant Secretary of State for Energy Resources, Geoffrey R. Pyatt held talks with President Bola Tinubu, multinational and local energy companies, as well as other stakeholders in this regard. In an exclusive interview with Onyinye Nwachukwu and Gbemi Faminu, BusinessDay’s Abuja Bureau Chief and Energy Correspondent respectively, Pyatt shared the outcomes of his two days visit and spoke about US commitment to work with Nigeria in achieving net-zero emission, energy security and access. He strongly believes that with Nigeria sitting on abundant solar resources, intensity, and space, its renewable energy sector should be bigger than it is today. Excerpts….

Can you tell us why you are visiting Nigeria and what has happened so far?

First and foremost, I came here as a reflection of the Biden administration’s commitment to our relationship with Nigeria and appreciation for the leadership that Nigeria has shown on some of the really fundamental energy issues. Nigeria was one of the early partners for the global methane pledge under which a number of oil and gas producing countries have committed to accelerate a way to reduce the flaring of methane in oil and gas production.

Nigeria was one of the very first partners for the Clean Energy Demand Initiative (CEDI) which is run by my Bureau to bring together clean power producers with many multinational corporations that are power off takers and are looking to source renewable power. Nigeria is part of Net zero world, the Department of Energy’s global initiative on energy transition.

I am also here because we are very enthusiastic about the leadership that President Tinubu is demonstrating on some of the hard issues around the energy sector and also the fact that Nigeria is a globally significant energy producer in terms of its oil and gas resources, but also a leader in the largest democracy in Africa, so a country with choices about its future energy mix will have an impact that goes far beyond its country.

We are interested in Nigeria’s success, because it is so significant to the larger continent and the challenges that much of the global south developing world are confronting right now is how to navigate these two huge geologic forces that are transforming the global energy map. The first being the energy transition and the shift to renewable sources which is happening much faster than most of the experts anticipated and will change things like demand for critical minerals, the need for recycling of batteries, demand for copper, the way in which we think about how we power our economies, the electrification of transport, but then also the huge repercussions from Russia’s invasion of Ukraine and the fact that as a result of the self-harm that Putin has done, the country that until last year was the largest oil and gas exporter in the world will never again be viewed as a reliable supplier by much of its market.

So Nigeria is right in the centre of all the work that I do, and I think about in ANR at the State Department and as I said while speaking at the Ministry of Petroleum Resources, we have proposed to Nigeria, a new Strategic Energy Dialogue (SED) with Nigeria, like we hold with some of our closest allies and partners around the world. For instance, in Asia, we have these energy dialogues, we have one with Vietnam.

So these are venues where we bring together all the US Interagency, not just the State Department, but partners from the Department of Energy, Development Finance Corporation, and Department of Agriculture in some cases, to work together to advance our energy partnerships and to advance energy transition which is so important to meeting the challenge of the climate crisis.

I was really pleased that in my meeting with President Tinubu, he and his team proposed much the same. So we were all thinking in the same way, this will be a new dialogue here in Africa, highlighting the importance that the Biden administration places on this bilateral relationship and everything that the President is leading. He has encouraged us to lead it on around our engagement with Africa, building on what happened at the Africa Leaders’ Summit last December in Washington and it leaves me hopeful about the scope that we have to do much more together.

I was not here just to talk to the government, I was also very pleased to spend time with some multinational energy companies, American companies, Nigerian power companies, from utility operators to renewable power vendors, and a fantastic event which I’m grateful to the team for putting together with a group of women involved in energy transition which left me convinced that Nigeria will be okay.

It was a really nice reflection of how much is happening at the grassroots, and civil society level in the space as well. So I’ll stop there, happy to talk about whatever you want, but I sort of come away from this very enthusiastic. That will certainly be the message that I’ll take back to Washington and back to my bosses in terms of the opportunities here for us to do even more together and the importance of doing that, given the centrality and the larger impact that Nigeria’s success in navigating these transitions I talked about will bring to the region.

What opportunities did you see as you tried to engage and push this important partnership?

One of course is the SED – the energy dialogue. We are also very focused on the opportunity to do more together in the area of decarbonisation of our fossil fuel sectors. Nigeria and the United States are very similar in that regard, we are both big Oil and Gas exporters. We both are looking at how to better manage those resources in a way that does the least damage possible to our shared climate. And what I am so impressed by is on so many of the issues that I was working on today, my government counterparts, we could have just traded talking points with each other, because I think the government understands this, they are sitting on top of a complicated set of issues, and Nigeria is also navigating questions around security, politics. Just like in the United States, you’re a democracy, so the only thing that the government can sustain is that which the democratic system validates.

But I come away from these discussions with a sense that we need to think even more ambitiously about what we are doing together. There is as I alluded earlier, an ongoing Energy Bureau technical assistance program in the area of decarbonization of fossil production. I’m going to go back and also take a hard look at what more we can do. If we have another project called the power sector program which focuses on working with countries and regions that are trying to manage the challenge of shifting to a renewable energy system and all the strains that, that places on power grids, so we’ll see what we can do in that area. And as I said, we have Nigeria as a founding partner for CEDI which was rolled out at COP-27, but we have not made a lot of progress in terms of execution and implementation here because we were waiting for the elections and the new government to be in place but I’ll go back and make sure that we are hitting the accelerator in terms of our CEDI cooperation as well.

Regarding the strategic dialogue you mentioned earlier, can you give us a sense of what it entails?

The most important thing is that the SED is not something we do once a year and check it off on the calendar. It is about creating mechanisms for ongoing exchange between our experts, so we can listen to Nigeria’s concerns on navigating these issues around energy security, transition and access and seeing that our experts are bringing to bear the best partnerships that we can offer regarding these issues.

Usually, these dialogues take up to two days, and I commit the big chunk of time to that and we bring in our private sector as well, which will be a part of our story as we continue to grow this mechanism. But it’s a chance for the USA to share our own experiences from our own energy transition journey and also to build international partnerships. As I said to the president during our meeting, the United States wants to be Nigeria’s preferred partner on these issues of energy transition, and security.

We know you work with a lot of different partners around the world, and you have a leadership role in the region, but we have a wonderful opportunity to do more bilaterally because we already have a strong corporate footprint here. And I think there is a prospect for that to grow even further as our companies see President Tinubu and his government tackling some of the difficult issues of the past like the exchange rate unification, but I also see prospects for us to do more in these emerging areas.

When you look at how many companies in the United States are popping up to work on things like green hydrogen, carbon sequestration, electric transportation, the management of grid stability, these are all areas where all of our economies, all of our energy systems are going to go through transitions. So we can learn things from each other. And as I said, there’s a sort of a natural affinity on these issues, because I kind of lost track of how many people I’ve met today, across the government, who studied in the US or worked in the United States or worked for an American company, and then came back here. So there’s a natural, pathway for us to build those private sector partnerships as well. And these are issues that are so big and governments alone are not going to solve them. The private sector is going to play certainly in the case of the United States, the leading role in helping to make our economies more resilient and more sustainable.

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You spoke about some bold decisions that President Tinubu has taken to tackle difficult issues. How do you think these decisions will enable some of these initiatives and partnerships to be explored?

I would not pretend to predict how Nigeria’s politics and economy are going to unfold. What is very clear to me, listening to President Tinubu and his team is that they are in a hurry to move the country forward and eager to do so in partnership with the United States.

My message, in response, was that the US government from President Biden on down is committed to our partnership here and he understands how significant Nigeria’s success is for our interest in Africa and the wider region and also how important it is that we mobilise resources that we can, to help facilitate and empower reforms that tackle these issues. These are tough issues in the United States as well.

Remember two, three years ago, we had these terrible winter blackouts in the state of Texas, which is the American equivalent of the Niger River Delta, that’s where all the energy is. But even there, people were not able to get their houses heated. So we’re all grappling with these issues.

The energy system and technology are changing very fast and what we have seen from American as well as Nigerian companies is that they have become global leaders based on their innovation and entrepreneurial skills, many of which have strong ties to the USA.

The energy sector should be the same and in fact, these two sectors are increasingly intertwined with each other because managing the energy system of the future will be digital and driven by technology, smart grids, and the ability to use ubiquitous sensors to do a much better job of maximizing the productivity of our energy resources because the cheapest energy of all is the one you don’t use and so driving efficiency into the system which is a lot of what the tech system is about.

Tech runs on energy, and all of these big cloud computing centers, our energy companies, Microsoft the Googles and AWS’s of this world have been very strong in their own energy transition commitments. Most of them have a corporate commitment to a hundred percent renewable power for their operations. That can become a driver for growing the renewable sector here in Nigeria, which should be bigger than it is today because you have the solar resources, the solar intensity, you have the space, but it’s a matter of building the policy framework, which incentivizes that, and again, these are exactly the same dilemmas that we confront in the United States. It’s not a matter of generating the power, it is the distribution grid and also recognizing that millions of Nigerians do not live in cities like Abuja or Lagos, they live in the countryside, the rural areas, so how are they brought into the energy system? I was encouraged to hear from one of the companies and that was at my women-owned business event about what they are doing with distributed solar. And these are areas where the technology and the business models are evolving very fast, but in a way that delivers real benefits for citizens.

Speaking about American companies that would like to invest in Nigeria’s energy sector, many of the young innovators are complaining about not getting enough support from the Nigerian government and private sector. What can the U.S. offer people like this?

Let me just offer a personal perspective on these issues. I’ll start by saying that the United States entrepreneurial ecosystem has succeeded because the government has been out of the way. There’s a reason Silicon Valley happened in California and not in Washington DC. and I think the same applies to some other countries like India where the whole technology innovation story grew up in Bangalore and Hyderabad and Chennai and not in Delhi was because that was about as far as far away from the government as people could get. And that’s very much the culture of this larger entrepreneurial ecosystem. I think that the success of Nigerian entrepreneurs in the fintech or technology area tells you about the human capital here and I’ve just validated that in all of my discussions during this visit.

The Nigeria FinTech story is one people know about. It was written there at Wall Street Journal articles about coders in Lagos and the story there, I think, in the energy sector. This is one of the reasons why the leadership that President Tinubu has demonstrated is so important because it helps to change the narrative and go beyond the issues of insecurity and corruption and the things that have sort of held back the investor community. And I think as progress is registered, you will see more of our entrepreneurs

saying hey, there’s something interesting going on here. We can learn from each other. That’s part again of what this strategic energy dialogue is meant to facilitate, is exactly that kind of exchange and that kind of raising the profile of energy and strategic energy cooperation in our overall bilateral relationship, but also to elevate where Nigeria fits into the Washington map of countries that we’re working with around the world on these issues.

Over the years we have seen an increased interest in the transition from fossil energy to cleaner energy sources, do you think Nigeria should put more effort into growing its oil and gas reserves or focus on diversifying away from fossil fuels?

I’ll say two things. One, that’s a question that only Nigerians can answer but I think, again, the comparison and the similarity to the US is really relevant. We are all trying to grow our renewable sector because it’s a fantastic opportunity. It’s one of the biggest job creation opportunities that has come along in decades because innovation and investment is happening so fast.

We all need to double down on our focus on the energy transition and the opportunities there, and what that transition looks like is going to vary from country to country. It’s going to look very different in Nigeria, from what it looks like in the United States, just like the energy transition in my home state of California, looks extremely different from what you might see in New York State for all the obvious reasons, including the fact that we have a lot of sun and wind and all that good stuff. People don’t care where the power comes from, they just want the lights to come out, and we’ve learned that in the United States as well.

The countries that have a significant fossil resource, need to figure out how to make that resource available but do so in the least climate-disrupting way possible. That’s why we are emphasizing the investments that we are making in carbon sequestration in the United States. My last government meeting was with a director from the Ministry of Science and Technology, who is working with colleagues in our Department of Energy on the policies that we will use in both of our countries to capture carbon dioxide from industrial processes and then store it underground geologically. We know how to do this, for the United States, this is going to be an essential part of meeting our climate commitments and our targets for decarbonisation, and net zero of our economy.

We have to do two things at once; we have to improve efficiency and one of the challenges Nigeria faces like in some parts of the United States are those areas that have a lot of historical infrastructure. So processing downstream investment from the 70s and 80s when you have a lot of growth in response to the oil shock and that equipment is due for recapitalization in order to have state-of-the-art compressors to electrify. And if you look at a typical industrial petrochemical process, a lot of them then were engineered without any sensitivity at all to Co2 intensity, or leakage to venting, therefore, it is a matter of making the investments to electrify pipeline compressors to shift renewable power inputs for those processing facilities rather than using fossil fuels for the compression. And the cooling process, you use renewable power for those processes which then freeze up even more molecules of gas to be sold to the rest of the world in the global market which is going to need all the energy that it can find for years to come from whatever source.

This is something I’m sure here in Nigeria, you are sensitive to it. I’m saying sensitive to it from my personal long history in South Asia, where you are seeing hundreds of millions of people coming into the middle class, if you look at the demand curve for energy from a place like India, where people want air conditioners and cars and color TVs and all the things that drive energy demand. So this is going to be a time when we need to find a way to satisfy that energy demand in a way that doesn’t destroy our climate and helps to keep that Paris target of 1.5 degrees Celsius within reach.

What will be your outlook for Nigeria’s energy transition journey and are there lessons from the USA?

First of all, every country’s situation is different, I’m sure Nigeria’s transition experience will have lessons for other countries. The United States has a federal system where the states are very powerful, what the energy transition looks like varies significantly from one state to another. Three is no cookie cutter, no algorithm that specifies boxes that must be checked. What is clear to me from my discussions with your government is that the destination is agreed upon, everybody knows where they want to get to, and the political will is there. But your country like mine is a democracy, and that transition is only going to be successful to the extent you bring people along, and you face the added burden.

Well, we face issues of energy justice in the United States with rural communities and disadvantaged communities, you have it on a much bigger scale, especially at the village, at rural levels. You are talking about people making a transition from having no energy at all to having an option of say, a solar cooler to cool their drinks – that alone is a significant lifestyle improvement, or having a light bulb so that at night, people can study or prepare meals, not in darkness. I think that’s the challenge that we all face, and as I said your pathway is going to look different from the one we followed in the United States.

But there are certainly lessons we’ll be able to learn from each other in part because technology is evolving so fast. Nobody in the United States was anticipating that we would phase out of internal combustion automobiles as fast as it’s happening. It’s happening because of innovation, because of what our companies are managing to accomplish, but it’s also happening because consumers are discovering that it’s a more reliable product.

I was also interested again in one of these women in energy companies that we met that focuses on microgrids, and solar power at the rural level for small SMEs. They were talking about how their package is not just renewable power but also efficient appliances. So bringing in fans and other things other appliances which are optimized for variability that comes with renewable power, but are also designed to maximize their efficiency. So there’s a lot of innovation that’s happening in these areas.

What advice do you have for the Nigerian government regarding policies and regulations to accelerate the country’s energy transition plan?

I would be the last one to show up and say, I’m from Washington, so here’s what you need to do. I think the government has the right instinct, my encouragement as it would be anywhere I travel that we all need to move as fast as we can. The climate crisis is a real thing and that in attention to the climate and climate change impacts of our energy choices is extremely dangerous, perhaps more important to our children, our grandchildren, and the kind of world they’re going to grow up in.

We all need to work as hard as we can and take advantage of the opportunity that exists because the technology is there. We know how to do a lot of the things that are necessary to reduce the carbon intensity of our energy system but it is a matter of forging a political leadership, to make the tough choices that will have to be made to build the political consensus in a democracy when needed. We have this challenge at home. I was a US ambassador overseas for nine years and I came back to go through our congressional confirmation process, when you have a job like mine, you have to present to the US Senate, there’s debate and they all vote, 100 members of the Senate. It was really interesting to me when I was going through the process and before the hearing, you actually meet with the senators and they can ask you whatever they want it’s really interesting to me, having been away from the country for a long time, to hear how political some of these issues have become in the United States. And in my deeply held view, in terms of the US, these issues of climate energy transition are not Republican or Democratic issues, these are issues of how we capture the opportunity that technology has given to us and how we maintain American leadership, and that’s a big part of my job, as I said to the president that America is your preferred partner, and you see us as a reliable partner whose interests are the same. We are not a country looking to just extract resources or, looking to export workers, we want you to be successful, but it was a reminder to me of how difficult these issues can be because they touch people at home and everybody has a perspective.

Everybody understands energy because it is a fundamental input to all of our economies. Look at what happened in Europe last year after Russia’s invasion of Ukraine there was a huge spike in gas prices and all of a sudden, you had governments that had sound budgets, and all of sudden, their budgets were no longer sustainable. Industries, and whole factories were shutting down, because energy was the fundamental input to the price of aluminium or the price of chemicals. That’s a long way of saying I really don’t have the answer to this.

This is something that your own elected leaders have to navigate through. But what I do know is that we all need to work together and the United States is absolutely committed to that partnership I believe that your government as well as committed to that partnership and is eager to think even more ambitiously about what we do together.

Asides from oil and gas, Nigeria has some other minerals that are critical to furthering energy transition, what plan does your government have to make sure that we’re not just extracting these minerals, but we’re also involved in the entire value chain?

It’s an even bigger challenge than you described because I think if we look at 50 years from now, there will no longer be big tankers carrying crude oil around the world. There may be a little bit of trade in gas, especially as an input for other things, we’ll have to look at ways to capture the carbon and store it, but what we are going to need is just a lot more of these mineral inputs. Then you look at the demand requirements just based on current growth trends and again remember everything is accelerating faster than people planned on, growth in lithium demand, by 2040, 42 times the amount of lithium, huge spikes in demand for cobalt, nickel, copper, etc.

I have not fact-checked this, but I had a Stanford energy economist who told me that the volume of copper that we would need to meet our climate goals by 2050 is more copper than mankind has mined in the entire history of civilization, so it’s just a lot of stuff. The United States is strongly committed to the principle that those resources need to be produced in a way that meets high ESGs and that delivers benefits for the countries that possess the resources and we have to be wary of getting ourselves in a situation where just as Europe was dependent on Russia for all of its oil and gas that we all become dependent on one country for these critical minerals.

Nigeria’s interest in that basket is strongly welcomed. The United States has an initiative, which we have launched with 12 countries in the European Union called the Mineral Security Partnership. It’s composed of countries that are mineral off-takers, but it’s designed essentially to create an alternative to say because we hear from a lot of countries, especially in Africa, and South America, who says the only country that ever comes to talk to us about this is China, and they show up with bags of money and they take the box away and sell the products back to the world, that is not the business model that we want to see over the future

So Nigeria’s interest in this is welcome, I think the other aspect of it, which we talked about a little bit during our meetings, is actually recycling and because we’re going to need especially in terms of battery minerals, we’re going to need to find technologies and processes to recycle and reuse some of these materials as well.

So it’s a really important issue, we have just scratched the surface and in the United States to be candid, we were not paying enough attention to these issues for 10 or 15 years and now everybody is on full alert.