Bioenergy and green growth in Nigeria

Abstract

Nigeria has abundant bioenergy, besides oil and gas. Harnessing bioenergy potential would facilitate Nigeria's green growth goals of strong decoupling, emissions mitigation, and domestic biofuel development to ensure sustainability, energy security and affordability Furthermore, Nigeria is revisiting her biofuel policy to promote domestic biofuel production. The policy aims to reduce emissions in the transport sector, increase employment, and saves foreign exchange. However, this policy depends on economic feasibility and competitiveness of local production. Therefore, this study aims to achieve three objectives. The first objective examines the role of bioenergy supply in decoupling economic growth from GHG emissions. The second objective analyses the optimal sectoral pathway for promoting environmental sustainability. The third objective aims to analyse ethanol demand and evaluates its economic feasibility and social impact. Chapter two examines the role of bioenergy supply in decoupling GHG emission in Nigeria. The findings show that bioenergy supply contribute to GHG decoupling between 2000 and 2023. However, there are variations as the time passes by. Nigeria has strong GHG decoupling (2000-2009), weak decoupling (2010-2014 and 2020-2023), and negative decoupling (2015-2019). Income and population contribute negatively to GHG decoupling, while intensities of energy and GHG contribute to decoupling trend in Nigeria. Similarly, decreasing share of fossil fuels relative to bioenergy has contributed to emission decoupling. Chapter three analyses the optimal bioenergy deployment to mitigate sectoral emissions. By applying autoregressive distributed lag (ARDL), the results indicate that deployment of total bioenergy increase GHG in the short term; however, it has no environmental impact over the long term. On the other hand, deploying biofuel in residential and commercial sector is the emission mitigation pathway. In addition, biofuel has the potential to improve environmental sustainability in transport sector. Chapter four analyses bioethanol demand and its economic competitiveness and social welfare impact. The findings establish substitution between ethanol and petrol. Meanwhile, domestic bioethanol development has positive gross margin, and modest payback period of 6 years. However, the net present value (NPV) is negative which makes the production economically uncompetitive unless producers are incentivised. However, local bioethanol production has tremendous social welfare impact because it has large potential to generate indirect jobs in the feedstock value chain. Hence, the study concludes that scaling up production and consumption of sustainably produced biomass and biofuels is critical for green transition in Nigeria. The study recommends that government should provide fiscal support through rebating value added tax to producers. Energy regulators should promote public-private-partnership to encourage investments in biofuel development in Nigeria.