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![handle is hein.journals/jawpglob139 and id is 64 raw text is: Journal of Law, Policy and Globalization www.iiste.org
ISSN 2224-3240 (Paper) ISSN 2224-3259 (Online)
Vol.139, 2024
The Consumption Fuel Subsidy is a Clog to Renewable Energy
Development in Nigeria
Noah A. Izoukumor
Associate Lecturer, University of the West of England Coldharbour Ln, Stoke Gifford, Bristol BS16 1QY.
Email: noah.izoukumor@uwe.ac.uk
The author(s) received no financial support for the research, authorship and/or publication of this article.
Abstract
In 2022, the Nigerian government has earmarked $15.7 billion for fuel subsidies, a substantial portion of its
projected $25 billion revenue for the year. This allocation raises concerns about the feasibility of financing
renewable energy initiatives outlined in the Paris Agreement. The significant expenditure on fuel subsidies
leaves limited resources for investments in renewable energy and critical social infrastructure such as education
and healthcare. This article contends that Nigeria's fuel subsidy programme contradicts the objectives of the
Paris Agreement, hindering the widespread adoption of renewable energy. To align with climate change targets
set in the Paris Agreement, Nigeria must reduce its subsidy allocations, bolster support for renewable energy,
and increase incentives for sustainable energy development at the national level.
Keywords: Fuel Subsidies, Paris Agreement, Nigeria, and Renewable Energy
DOI: 10.7176/JLPG/139-09
Publication date: January 31st 2024
Key policy insights:
* Over half of Nigeria's government revenue is allocated to the fuel subsidy budget, potentially impeding
investments in renewable energy.
* The Nigerian subsidy programme is incompatible with the Paris Agreement as it contributes to
increased C02 emissions and hampers substantial development in renewable energy.
* Beyond its inconsistency with the Paris Agreement, the programme is marred by fraud and dishonest
practices.
* Therefore, it is imperative for the Nigerian government to scale down the subsidy programme and
channel resources into renewable energy development.
1. Introduction
Renewable energy stands as a crucial element in the global effort to mitigate greenhouse gas emissions and is
widely regarded as the cornerstone of sustainable development. 1 The Intergovernmental Panel on Climate
Change (IPCC) emphasizes the pivotal role of renewable energy in providing sustainable energy services and,
notably, in addressing climate change. 2 This is attributed to the significantly lower carbon dioxide (C02)
emissions associated with renewable energy technologies compared to fossil fuels.3
Numerous national governments, in alignment with the Paris Agreement's goal of limiting global warming
to 1.5 degrees Celsius, have committed to substantial renewable energy deployment. Nigeria, as an example, has
set ambitious targets, including the installation of 13,000 MW of solar photovoltaic power plants by 2030,
enhancement of the national electricity grid, and a 2% annual improvement in energy efficiency (30% by 2030).4
The cost to achieve these domestic commitments in Nigeria is estimated at approximately $142 billion over the
next decade, 5 a figure four times higher than the country's entire 2020 budget of $35 billion. 6
While the commitment to renewable energy is clear, the substantial funding required poses a challenge,
particularly when considering Nigeria's practice of fuel subsidies. In 2022, Nigeria allocated $15.7 billion for
fuel subsidies, 2 constituting over half of its projected total revenues of $25 billion.1 This reliance on fuel
'Z. Elum, and A. Momodu, 'Climate change mitigation and renewable energy for sustainable development in Nigeria: A discourse approach'
(2017) 76 Renewable and Sustainable Energy Reviews, 72-80 at 72 75.
2W. Moomaw and K. Urama, 2011: Introduction. In IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation
2011 (eds)], Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. at 167.
3lbid at 167.
4Federal Republic of Nigeria (2018) First Biennial Update Report (BURl) of the Federal Republic of Nigeria under the United Nations
Framework Convention on Climate Change (UNFCCC) 11.
Federal Ministry of Environment Department of Climate Change National Climate Change Policy for Nigeria 2021 - 2030 at p. 39.
6 Aljazeera, 'Nigeria's parliament passes record budget for 2020' (2019) < available at https://www.aljazeera.com/ajimpact/nigeria-
parliament-passes-record-budget-2020-191205181608971.html > Accessed 2d April 2023.
7 D. Elumoye and E. Addeh, 'Nigeria's $15.7bn 2022 Fuel Subsidy Projection to Exceed All 36 States' Budget (This Day news Paper 2022 )
available at Report: Nigeria's $15.7bn 2022 Fuel Subsidy Projection to Exceed All 36 States' Budget - THISDAYLIVE accessed 22d May
2023.
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