• Monday, February 26, 2024
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Energy Transition, CNG? – Whither Nigeria?

Energy economics: EV vs CNG-vehicles

The quest for energy has been a defining journey in the history of mankind. From ancient times of harnessing the power of the sun and moon to kindle a fire, through the symbolic lighting of the gas powered Olympic torch, to the electric vehicle today, man’s ability to control and manipulate energy sources continues to contribute significantly to growth and development of the world today.

In the growth trajectory, Nigeria like the rest of Africa finds itself caught in the web of how to move to cleaner, more environmentally friendly renewable energy whilst balancing it with the need to industrialise and grow our economies with fossil fuels of diesel and PMS which are considered dirtier.

Moving People

Across the world, transportation and getting people around is one of the most significant contributors to economic growth as well as carbon pollution. Increasing concerns about Greenhouse gas emissions from aeroplanes, trains, cars, etc has gotten the world looking for more environmentally friendly and energy efficient modes of transportation.

Globally, gas continues to gain acceptance as a reliable ecologically friendly and cheaper source of energy which reduces greenhouse gas emissions and air pollution. Across the world today, it is estimated that over 23 million vehicles are powered by natural gas and it is projected to grow by over 15% by 2026.

Around the globe, gas is expected to continue to grow in share with demand from Non-OECD countries (countries that are not members of the Organisation for Economic Co- operation and Development With electric power and industrial uses being the dominant factor globally.

The Nigerian debacle

Since independence in 1960, Nigeria has predominantly relied on PMS without fully exploring the potential benefits of its extensive natural gas reserves.

The central role the transportation sector plays in our economic growth is one that must be actively studied by the government to enable it to prepare and respond via policy.

Sadly, the inability of past leadership to precisely identify the volume of PMS consumed in the country has contributed in no small measure to the scandalous petroleum subsidy regimen that have beleaguered Nigeria for years.

Nigeria’s reliance on road transport has been astronomical thus making it invaluable to any national sustainable development goals. The continuing use of PMS and diesel to meet our transportation needs is further challenged by the constant fluctuation of the FX which affects its pricing and availability. This is compounded by the unproductive state of our refineries which had forced us to export our crude oil and import poor grades of PMS amongst others.

This lack of knowledge of our precise energy needs, environmental impact of greenhouse gas emissions and the stark reality of the world shifting attention towards more sustainable and eco-friendly solutions has caused our leadership and policy makers to look more towards gas for energy to grow our economy.

Gas Powered

Nigeria has been said to have more natural gas than we may be able to consume in this lifetime; the challenge has always been how to get it out of the ground and into our homes and vehicles.

In 2020, the federal government recognized the limitations of relying solely on PMS, especially in underutilizing Nigeria’s abundant natural gas reserves. This realisation prompted the establishment of the National Gas Expansion Project (NGEP), aiming to enhance gas accessibility, diversify the economy from PMS, and boost natural gas utilisation. Today, Compressed Natural Gas (CNG) plays a prominent role in the transportation sector, being a methane-based gas stored at high pressure in durable containers. CNG is cost-effective compared to gasoline or diesel, reflecting a strategic move towards optimising Nigeria’s considerable natural gas resources.

In Nigeria, it is estimated that of the approximately 12 million cars registered on Nigerian roads only about 5,000 were powered by CNG.

In 2022, as part of the subsidy removable policy, the ambitious project of converting over 1 million cars to CNG was initiated. Some companies took up the challenge and NIPCO initiated the ambitious project of converting 1 million cars to CNG. Local car manufacturers like Innoson motors have started rolling out CNG powered cars for the Nigerian market. The Ogun State government recently pioneered the drive by rolling out CNG vehicles also the same as Lagos state. The Federal Government through the Presidential Compressed Natural Gas Initiative Steering Committee has said the compressed natural gas conversion facility commissioned in Lagos will attract over $2 billion investments to Nigeria.

One of the leading contributors to the advancement of the research in the gas sector in Nigeria says over 5,000 vehicles have been converted to run on CNG since 2009 with about 13 CNG stores to service the same and plans are underway to convert 10,000 vehicles to gas engines by 2024.

These solutions are charting a course to a direction that considers sufficiently our local context without jumping on global trends or where the attention of perceived funders is as it considers our situation on the merit, what we have, how we can grow and an effective utilisation of our full capabilities.

Is CNG The Solution?

Just before you convert your fuel engine to CNG, we need to be clear whether CNG is the messiah we need or whether we should stay with the more affordable forms of gas like LPG or CNG. This is because there is a lack of CNG infrastructure to match the growth in usage, including the following issues:

1. Infrastructure to compress the gas

2. Availability of gas to compress

3. Cost viz a viz LPG

4. LPG can also fuel vehicles

Dapo Akinosun, SAN, is an Energy lawyer and Arbitrator. He is the co-author of the only Nigeria book on Gas – “Understanding Natural Gas- A Nigerian Perspective”