Climate Change: We need to create environment that‘ll stimulate investment in the country– Dr. Chioma Nwachuku, Seplat Energy  

Considering how rapidly the impact of climate change is rapidly spreading globally, how will failure to identify, address and manage climate risks and their opportunities define the present state and future of businesses in the Nigerian energy sector? How can we address this potential gap and the risks it presents?

At COP26, which was held last year, the USA, Canada, and other countries said they would stop funding fossil fuel projects, and what that means is that investment would dwindle. Of course, with the war in Europe, that has changed a bit, and their disposition toward that might change a bit.

But the facts remain that under it, there is this moving away from fossil fuel projects. So, on what is the future, Nigeria is going to be in dire need. It will not be easy if we move away. I’m happy to hear that we are doing a number of things that even electric cars would be coming next year.

So, if you look at  it again, what the Secretary General of the UN said, he said, ‘we are in a life or death struggle for our own safety today, for our survival tomorrow.’

So, whether one believes it or not, when this kind of statement is made, it means that it is very important that enough attention is given to what needs to be done.

How do we address this gap?

I would like to just quickly zero in on three areas, I think would be important for us to look at.

We should create an environment to stimulate investment. Because what we’re talking about is decarbonization, it’s going to net zero, it costs a lot of money, and it’s capital intense. So, if you have to invest, you want to invest in an environment that is friendly, and investors would like to come. So there must be an enabling environment created by the government for people to want to invest in the environment.

How are we treating the investments people are making right now on projects? That’s an opportunity to see how people who want to invest in the new energy projects will be excited to come. It’s an indication. If we do not pioneer creating a sustainable investment opportunity, people will be shying away from coming to invest in the country.

So we’ll need to close the gap by doing that. Again, another way is access to available capital pools. We have agreed that a number of capital is available for those who want to go into new energy. In fact, it has tripled 10 times in the last 10 years. From 2000 to 2010, we had a $5 billion possible investment in this area. But between 2010 and 2020, we had $55 billion but most of them are going to North and South Africa. So we need to position ourselves to tap into these opportunities and bring in the investments that are required to move into the new dispensation we are talking about.

Another thing we need to look at is attracting the skills and competencies that are required.  We’re talking about new technologies. We’re talking about the carbon tax. We are talking about a new paradigm shift we need to make.

How do we develop competencies around these areas?

And finally, it is expected that as some statistics showed that 40 percent of labour  who are currently doing oil and gas are North Africans, not Nigerians more or less.

So, when they move to the new dispensation, the new energy, the renewables and we are still where we are, do we have the opportunity to fill that gap? So we need to actively build the skills to fill in the competencies that are required.

Now, what high-level changes should we expect from the Nigerian oil and gas sector? And how is the sector strategically positioning itself to reap the great opportunities in climate change, carbon capture, and energy transition?

You talked about oil and gas being the focus and why a lot of attention is on oil and gas. Of course, it’s accused that we produce 42 percent of these greenhouse emissions. So it’s not surprising that if you do as much as that, indirectly or directly, you would be under scrutiny.

Demola just spoke on a number of the issues in terms of challenges and innovations. But let me just add a few more. It also gives us some great opportunities; great opportunities in the sense that it could lead to more divestments in oil and gas. We are now looking at gas. Companies like Seplat, more intensely significantly investing and finding how we can use it to do the just transition we all talked about.

We are looking at ending our own routine flaring in 2024, which is six years ahead of Nigeria’s 2030. And if you look at it, as a country, if people at the Climate Council are doing what they need to do around the Climate policy that has been passed. I’m happy Dr. Salisu spoke a lot about carbon trading because these are very new areas for most companies.

How are we going to do carbon trading, carbon tax, carbon credits, get credits from it or even sell what we have? Now that the environment ecosystem is filled with a lot of knowledge in this area, it makes room for greater opportunities that I’m talking about.

What else do we expect?

We expect some policy and legal implications. Because as we know, what we’re talking about is people acting and behaving in a particular manner to ensure that you decarbonize, to ensure that you reduce whatever impact you’re having on the environment.

So we see that we’re going to have a lot of reporting requirements. Companies should be ready for that, if you’re not already ready for that, then you are going to be falling behind.

However, we need to be aware that it also exposes us to litigations. Those are some of the changes that could happen and a lot is being said about technology because that is the way to go.

For us, technology is what we’re looking at. When we say we are going to continue our upstream operations, we’re looking at technology to help us to decarbonize our operations and make them more sustainable.

So technology will be ruling the day. As much as possible, every company really needs to focus on what they are going to do with technology to aid their operations. The technology of course means consumer behaviour also needs to change. Look at electric cars as an example, they may not be in Africa or Nigeria at the moment but it’s gaining ground all over the world.

In the situation we are now, we are moving away from fossil fuel projects, and moving away from carbon-based projects or the environment, will lead to customers looking for very low carbon emission products. So these are some of the changes that one would expect.

Then last but not least, if we do not move, we stagnate, and when we stagnate, all the talk about global warming, the company may be cut off and the company may die.

There’s a sense of urgency that is needed and I’m happy that people like EY are running these sessions to highlight the issues and ensure that urgency is important for everybody in the ecosystem to play their own parts.