Nigeria’s ambition to achieve net-zero emissions by 2060 is confronting a challenge that could determine whether the target remains a policy commitment or becomes an achievable investment programme: how to mobilise the estimated $400bn required to finance the transition.
The funding requirement, highlighted by former Vice President Yemi Osinbajo, means Nigeria would need to attract roughly $10bn in additional investment annually over two decades, on top of spending that would ordinarily take place under existing energy and development plans.
For stakeholders examining Nigeria’s energy future, the question is therefore shifting from whether the country has enough oil, gas, solar and other energy resources to whether it can turn those resources into projects capable of attracting long-term capital.
Business and Energy Analyst Kunle Odusola-Stevenson said Nigeria’s experience showed that possessing natural resources did not automatically translate into productive infrastructure or reliable energy supply.
Nigeria, he noted, has remained a major oil producer while depending heavily on imported refined petroleum products for years. Its substantial gas reserves have also coexisted with inadequate supply to industries and power plants, while strong solar potential has not translated into universal access to electricity.
“The problem, therefore, is not simply what is beneath the ground or above our heads. The problem is converting resources into productive economic assets. And conversion requires capital,” he said.
From plans to bankable projects
According to Stevenson, Nigeria has produced numerous energy policies, transition plans, master plans, licensing programmes and investment announcements.
The more difficult task, he said, is developing projects that investors can finance.
Investors, he explained, need predictable revenue, enforceable contracts, manageable risks and a reasonable prospect of recovering their capital and earning returns.
He argued that Nigeria needed to move away from what he described as an “announcement culture” towards a “bankability culture”, where individual projects are structured according to the type of capital they require.
“A transmission project, a gas pipeline, a refinery, a solar mini-grid and an offshore oil development cannot be financed in exactly the same way,” he said.
The distinction is significant because Nigeria’s transition will require investment across several parts of the energy system, including electricity generation and transmission, gas infrastructure, renewable energy, clean cooking, transport, industrial facilities and energy-efficiency projects.
The oil question
The financing debate is also complicated by Nigeria’s continued dependence on hydrocarbons.
While the government has committed to reducing emissions, oil and gas remain central to public revenue, exports and industrial activity.
Stevenson said Nigeria should therefore avoid treating its remaining hydrocarbon resources simply as sources of government revenue.
Instead, he argued that the country could use proceeds from the sector to build infrastructure and productive capacity, including gas projects, refineries, petrochemical industries and human capital.
“Oil should increasingly be treated as a source of capital for economic transformation—not merely as a source of government revenue,” he said.
Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, has similarly argued that Nigeria and other African countries must balance decarbonisation with the need to expand economic opportunities and energy access.
Ekpo has maintained that gas remains important for electricity generation, industrial production, transportation and clean cooking, while arguing that African countries should be able to utilise their natural resources to support development.
President Bola Tinubu has also called on investors to continue investing in fossil-fuel projects, pointing to the energy requirements of developing economies.
Renewables versus gas
The role of gas in the transition, however, remains contested.
Environmental campaigner Nnimmo Bassey, of the Health of Mother Earth Foundation, disputes the description of gas as a transition fuel.
Bassey argues that gas remains a fossil fuel and that continued investment in gas infrastructure could expose Nigeria to stranded assets as global energy systems move towards lower-carbon technologies.
He has advocated a faster expansion of renewable energy as a way of improving energy access while reducing Nigeria’s exposure to future fossil-fuel risks.
Akinwole Fatusi of Sustainable Energy for All has also called for increased investment in distributed solar systems, arguing that Nigeria needs to expand electricity access beyond dependence on centralised power infrastructure and oil revenues.
The competing positions reflect a broader question facing policymakers: how quickly Nigeria should shift capital towards renewables while still using oil and gas to meet current energy and fiscal needs.
Who pays for the transition?
The scale of the required investment means government funding alone is unlikely to be sufficient.
Climate officials have called for a combination of concessional finance, development finance, private investment, blended-finance mechanisms, technology transfer and stronger institutions.
Dr Tenioye Majekodunmi, Director-General of the National Council on Climate Change, said the transition should ultimately be judged by its effect on Nigerians.
She said the process should expand access to energy, create employment, attract investment and improve living standards.
For Majekodunmi, reducing emissions without addressing inequality would not amount to a just transition.
She has therefore called for financing models capable of bringing private capital into projects while ensuring that vulnerable communities are not excluded from the benefits of the transition.
Research and Policy Officer at the Africa Policy Research Institute, Olumide Onitekun, similarly warned that Nigeria could reproduce some of the inequalities associated with the fossil-fuel economy if social considerations were not incorporated into new energy investments.
He identified distributive, recognition, procedural and restorative justice as important elements of a fair transition.
Africa faces wider financing gap
Nigeria’s challenge is part of a broader African financing problem.
Osinbajo previously noted that renewable-energy investment across Africa remained substantially below the level required to meet the continent’s energy and climate objectives.
He said annual renewable-energy investment of roughly $3bn across Africa was inadequate relative to the scale of the continent’s needs.
For Nigeria, the challenge is even more complex because the country must simultaneously address electricity shortages, expand industrial capacity, improve energy access and meet its climate commitments.
The $400bn estimate therefore represents more than the cost of replacing fossil fuels with renewable energy. It encompasses the broader transformation of an energy system that continues to face infrastructure deficits and financing constraints.
The real test
Nigeria has no shortage of energy resources or policy ambitions. The more immediate test is whether those ambitions can be converted into investable projects and whether the country can attract capital on terms that support both economic development and its climate objectives.
That will require clearer revenue structures, credible contracts, stronger institutions and financing arrangements capable of sharing risks between government, development institutions and private investors.
It will also require a clearer determination of how oil and gas revenues are used during the transition and how renewable-energy investment is scaled without leaving vulnerable consumers and communities behind.
With an estimated $400bn still required beyond business-as-usual spending, Nigeria’s net-zero target will ultimately depend not only on the technologies it chooses, but on its ability to finance and implement them.
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