Nigeria ranks 108 out of 120 countries on the ETI 2023 and is the largest economy and richest oil resource centre of the African continent, as well as the largest gas consumer and producer of West Africa.¹²⁴ Over the last 10 years, Nigeria’s overall ETI score has improved (3%), while its system performance scores have fallen slightly (1%). The country’s growing population and array of socioeconomic issues mean it needs sustainable energy sources to meet the increasing needs for all sectors of the economy. High scores on regulation and political commitment, relative to other enabling dimensions, are evidenced by the country’s notable power-sector reforms and plans to accelerate its clean energy transition and meet key development goals, including achieving net zero by 2060.

Nigeria’s Climate Change Act, which was signed into law in November 2021, “provides the legal framework and a bold institutional arrangement for action on climate change. The Act established a National Council on Climate Change, chaired by the President, to lead work under the Act and help mainstream climate change action into the country’s development agenda. … The vital next step is for the Council to publish Nigeria’s first carbon budget as requested by law and put in place efforts to monitor implementation and compliance”, according to global think tank ODI¹²⁵ In addition, the launch of the country’s Energy Transition Plan in August 2021 sets out a timeline and framework for achieving reduction in emissions across five key sectors: power, cooking, oil and gas, transport, and industry. These two important steps and a revised nationally determine contribution are reliable signs of Nigeria’s future. Nevertheless, challenges remain to turn these commitments into action.

As ODI points out, a “major obstacle to Nigeria’s transition away from fossil fuels is the high levels of government subsidies for their production and consumption. Progress on reforming fossil fuel subsidies has been challenging, as consumers expect accessible energy and affordable pricing from the government as a benefit of being a major oil producer”.¹²⁶ Nigeria currently has one of the highest rates of energy poverty in the world. The electricity access rate stands at 25% for rural populations for whom biomass and waste are the primary source of energy for cooking. Conversely, Nigeria has one of the highest costs of electricity in the world at an average of $0.52/kWh.¹²⁷ “Development finance institutions and other donors, wealthier, high-emitting countries, and international NGOs are well-placed to support this agenda through financing and research, and by encouraging constructive engagement on subsidy reform and justice and social responsibility in energy transition more broadly.”¹²⁸

Nigeria’s energy transition creates significant investment opportunities, including establishing and expanding industries for solar, hydrogen and electric vehicles, and using its vast natural gas resources for economic development. A Renewable Energy Roadmap was produced with the International Renewable Energy Agency and the Energy Commission of Nigeria in January 2023 that “encompasses all key sectors of the Nigerian energy system to provide additional context for energy policy discussions on how increased ambition in terms of renewable energy – beyond current government policy and targets – can be realised.”¹²⁹

Overall, the energy transition in Nigeria still requires significant investment from the government and support from its citizens. Prioritizing economic development, along with proper planning and strengthening institutional and fiscal frameworks, can help Nigeria accelerate its transition. Based on lessons learned from other countries, the government could identify (and support) low-carbon energy solutions, especially in the rural and peri-urban areas of Nigeria; place greater emphasis on innovation in new energy infrastructure development; improve energy efficiency in small and medium-sized enterprises; explore the effective use of domestic funding; and harmonize different energy policy frameworks. Together with the Renewable Energy and Energy Efficiency Associations-Alliance, the World Economic Forum is engaging key public- and private-sector stakeholders to further understand Nigeria’s energy transition policy plans, associated investment barriers to accelerate the clean energy transition, and practical solutions to address those barriers.