INTRODUCTION
Why should Nigeria employ the law to promote its renewable energy sources for electricity generation, despite its abundant deposits of oil and gas? Creating a law for the development of renewable energy in Nigeria offers Nigeria many benefits in the quest for the optimal utilization of the country's energy resources. A renewable energy law could be used in actualizing the objectives of energy and the environment.Footnote 1 These objectives in relation to Nigeria specifically include energy security and access, economic development and the need to address the environmental challenges associated with the use of energy.Footnote 2 There is a global consensus that the challenges of increasing energy demand, global warming and rising energy prices can be addressed through the development of renewable energy.Footnote 3 The need to address the problems of energy security, environmental concerns, and particularly climate change and economic development are the main drivers for the promotion of renewable energy.Footnote 4
The trend towards the use of renewable energy sources is increasing.Footnote 5 The energy crises of the 1970s first created the impetus for the consideration of renewable energy as an alternative energy source to enhance energy security.Footnote 6 This was later intensified by the growing concern over climate change in the 1990s.Footnote 7 With the increase in global energy consumption, rising prices and the depletion of resources, as well as environmental problems associated with fossil fuel, the overreliance on fossil fuel carries negative consequences.Footnote 8 Energy consumption is needed for development and there is a need to guarantee access to energy, an important issue in energy security. It will be important to consider these benefits from the perspective of Nigeria, an oil rich country.Footnote 9 While renewable energy sources are widely available in Nigeria, they have not been harnessed for electricity generation in the power sector.Footnote 10 There is the need for affirmative law to create a process to support the incorporation of renewable energy into the Nigerian power sector.
This article identifies the justification for the utilization of renewable energy in Nigeria. It depicts the need for the law to play a role in the deployment of renewable energy in the country. The first section examines the considerations for renewable energy in Nigeria. These include the role of renewable energy in economic development, promoting energy security and access, and reducing the environmental concerns of overreliance on fossil fuel. This is followed by an argument on the advantages of renewable energy over fossil fuel. The negative environmental and social impacts of renewable energy are discussed, as well as the efficiency of renewable energy sources in contributing to energy benefits. It is contended that, while all energy sources could have negative environmental and social impacts, the impacts of renewable energy are relatively lower than those of oil and gas. The benefits of renewable energy also outweigh these impacts. After making a case for the promotion of renewable energy, the article considers legal measures to be put in place to develop Nigeria's abundant renewable energy sources. The article concludes that incorporating renewables in Nigerian energy law is a worthwhile area, requiring legislative intervention.
ENERGY PROFILE OF NIGERIA AND UTILIZATION IN THE POWER SECTOR
Electricity generation in Nigeria like any other country can be through the use of both conventional and renewable sources. Nigeria is a resource rich country, endowed with an abundant supply of conventional and renewable energy sources. It is richly endowed with both oil and natural gas, and is the tenth and seventh largest world producer of oil and gas respectively.Footnote 11 Oil reserves are estimated at about 36.5 billion barrels.Footnote 12 Available gas reserves in the country are estimated at 187 trillion cubic feet.Footnote 13 In addition, there is unexploited potential in the inland Benue and Chad Basins.Footnote 14 Overall there is growth potential of 600 trillion cubic feet.Footnote 15 Most production is from associated gases, a large proportion of which is flared, making Nigeria one of the world leaders in gas flaring.Footnote 16
Nigeria is also rich in coal and lignite, with reserves of 4 billion metric tonnes.Footnote 17 The coal industry was initially utilized for the production of electricity and the country's industrialization. Coal was used to power the Nigerian power sector before the discovery of crude oil in Nigeria.Footnote 18 However, coal is not currently utilized to generate electricity in Nigeria and is now seen as being insignificant.Footnote 19
Nigeria is rich in renewable energy sources. Nigeria's large scale hydropower potential is put at 10,000 megawatt, with small scale at 734 megawatt.Footnote 20 About 14 per cent of the country's electricity is generated from hydropower.Footnote 21 Solar radiation potential is estimated at 3.5–7.0 kilowatt-hours per square metre per day.Footnote 22 The endowment of wind energy is put at 150,000 terra joules per year,Footnote 23 while biomass is 144 million tons per year.Footnote 24 However, the contribution of renewable energy to Nigeria's energy mix has been very modest, with the exception of hydro-electric generation. While the renewable energy sources discussed above are largely available in Nigeria, they have not been harnessed for investment in the power sector. The majority of investment has been directed towards oil and gas, despite the high renewable energy potential in Nigeria.Footnote 25 This situation has been rightly captured by the National Planning Commission (NPC) to the effect that: “[c]urrently, Nigeria's energy mix is dominated by the fossil fuels, ie oil and gas … Nigeria needs to diversify its energy mix with renewable energy sources. Nigeria has vast renewable energy resources including hydro (small and large hydropower), solar, wind and biomass.”Footnote 26
Nigeria's energy mix is dominated by oil (53 per cent), followed by natural gas (39 per cent) and hydroelectricity (7 per cent), while other energy sources have not been exploited except for fuel wood utilized in meeting domestic cooking needs.Footnote 27 Electricity generation to the grid comprises three hydro and six thermal generating stations, having an installed capacity of about 6,000 megawatt, of which between 2,000 and 3,000 megawatt of electricity is actually generated.Footnote 28
Nigeria has mainly focused on oil and gas for the generation of electricityFootnote 29 and a substantial proportion of Nigeria's revenue is from oil and gas.Footnote 30 Nigeria operates an oil-centric economy, not minding what renewable energy can contribute in meeting the country's energy needs. There is no level playing field between conventional and renewable energy sources in Nigeria. This has been the situation since the emergence of the Nigerian power sector. This is also attributed to the generous subsidies granted to the generation of electricity from fossil fuel sources.Footnote 31 Most incentives are in favour of oil and gas utilization in the power sector.Footnote 32 The following are example of incentives available to companies generating electricity from oil and gas:Footnote 33 tax exemption for a period of three years, renewable for another period of two years;Footnote 34 after the tax free period, an accelerated capital allowance of 90 per cent, with a 10 per cent retention for investment in plant and machinery, and an additional investment of 15 per cent, which shall not reduce the value of the asset;Footnote 35 during the tax free period, dividends are also tax-free provided the investment was in foreign currency or the introduction of imported plant and machinery was not less than 30 per cent of the equity share capital of the company;Footnote 36 exemption from value added tax and customs duties for plant, machinery, and equipment or spare parts for gas projects.
None of these incentives extends to renewable electricity generation. However, one of the options for benefiting from fiscal incentives for businesses is to be certified as a pioneer company.Footnote 37 Electricity companies in Nigeria may also qualify for the pioneer status scheme. Under the Industrial Development (Income Tax Relief) Act, Cap I7, Laws of the Federation of Nigeria, 2004 (Income Tax Relief Act), companies referred to as pioneer companies are granted tax exemptions if they are within the pioneer list.Footnote 38 The law on the pioneer status is designed to provide incentives to companies engaged in priority areas and sectors where productive capacity is below demand.Footnote 39 The companies are incentivized to enable them to grow and develop during their formative years.
Under the Income Tax Relief Act, the Federal Executive Council can grant the status of pioneer company in the designated list.Footnote 40 The Federal Executive Council can also expand the list of subjects or areas for which pioneer status can be granted. Application for pioneer status is made to the Federal Executive Council through the Nigeria Investment Promotion Commission.Footnote 41 The holder of a pioneer certificate enjoys a tax holiday for a period of three years, which may be extended for another period of two years, as well as tax free dividends from the profit made within the period.Footnote 42 Companies engaged in manufacturing electrical equipment and machinery are eligible where all or a substantial part of their components are locally sourced.Footnote 43 Industries engaged in the manufacture of solar energy powered equipment and gadgets, and utility companies involved in independent power generation, utilizing gas, coal and renewable energy sources, also qualify for the relief. Despite the existence of such an incentive for renewable energy, there is no known record to indicate that renewable energy investment has been influenced by such an incentive. Besides, the incentives can also be utilized by investors in generating electricity from fossil fuels. A “level playing field” is absent from the situation. Thus, Nigerian energy law is designed to favour electricity generation from fossil fuels.Footnote 44 Incentivizing renewable energy will be a way forward. This is discussed later.
CONSIDERATIONS FOR RENEWABLE ENERGY IN NIGERIA
Energy security and access
The nexus between energy security and renewable energy has its roots in the oil price shocks of the 1970s where developed countries decided to take measures to enhance the development of the renewable energy sector in response to the global problem of energy security.Footnote 45 Since then, renewable energy as a means of enhancing energy security has continued to be considered as an important element of foreign and national energy policy.Footnote 46 Countries have continued to strive to promote the use of renewable energy as a source of meeting energy demands.
Energy needs will continue to grow. Developing countries will have a progressive increase in their energy needs, while developed countries will continue to fulfil their vast energy requirements.Footnote 47 The current commercial energy system is dominated by fossil fuels which are finite in nature. With government support and infrastructural investment over the years, the finite fossil fuels have become cheaper through economies of scale.Footnote 48 This gives a clearer indication that these resources will diminish, given the incentives that make them cheaper to harness, thereby raising the question of energy security in the future. According to projections by the United States Department of Energy, the world's total consumption of energy sold will increase by 57 per cent between 2004 and 2030.Footnote 49
Renewable energy is important for energy security and this requires attention to be paid to the development of renewable energy in Nigeria.Footnote 50 The NPC maintains that: “[t]he country needs to develop a technologically driven renewable energy sector that will harness the nation's resources to complement its fossil fuel consumption and guarantee energy security.”Footnote 51 As noted by the Intergovernmental Panel on Climate Change (IPCC): “[l]ocal renewable energy options can contribute to energy security goals by means of diversifying energy supplies.”Footnote 52 They can guarantee a supply of energy. Renewable energy sources are inexhaustible and potentially available in most countries.Footnote 53 Energy needs require the diversification of energy and switching to alternative sources is important.Footnote 54 Rather than focusing on fossil fuels that have a depletion time, using other energy sources will enhance the preservation of fossil fuel in Nigeria. Renewable energy can create access to energy services to meet the energy needs of persons and communities without access to energy.Footnote 55
Petroleum remains the main source of government revenue and foreign exchange in Nigeria.Footnote 56 With the massive exploration of petroleum, it is logical to conclude that, since the resources are finite, if they become exhausted without the development of renewable energy resources, the problem of energy security will become a prominent matter to be addressed by future generations. Only about 40 per cent of households in Nigeria are connected to the national grid and rural communities rely mainly on wood fuel, which is used by over 60 per cent of Nigerians in rural areas.Footnote 57 This is also an indication that renewable energy has much to offer in providing energy to the over 60 per cent of the population that is not connected to the national grid. Most residential and non-residential consumers in Nigeria generate their own electricity for consumption.Footnote 58 A significant increase in electricity generation from renewable energy sources will contribute to the diversification, security and self-sufficiency of energy supply.Footnote 59
Besides meeting its own energy needs, Nigeria is of strategic importance to energy security in the international energy market. Boosting the use of renewable energy sources will also increase the supply of Nigeria's energy to other countries. Nigeria supplies 40 per cent of its oil to the United States.Footnote 60 The promotion of renewable energy will increase the global share of Nigeria's energy supply. Nigeria's energy needs will be met, as well as those of other countries. Furthermore, about 1.3 billion people worldwide lack access to electricity, while 2.6 billion do not have access to clean energy facilities for cooking.Footnote 61
Underscoring the importance of renewable energy to energy security in Nigeria, the NPC posits that, to achieve security of supply in Nigeria, the country's renewable energy resources (including wind, solar, hydro and biomass) will be utilized to generate electricity.Footnote 62 This will constitute the main element of the strategy in attaining targets for electric power generation.Footnote 63 The NPC states further that strategic initiatives, to be implemented to facilitate the development of a competitive and efficient power sector, include provision of incentives to facilitate the utilization of alternative energy resources by reducing the reliance on gas-fired power plants and ensuring security of supply.Footnote 64 This highlights the importance of renewable energy in guaranteeing energy security in Nigeria. The law can be used in achieving the benefits of energy security through setting out measures to promote renewable energy in Nigeria. Thus, a legal framework for renewable energy support can be designed and targeted towards increasing energy access, supply and reliability.
Economic development
One of the essential ingredients required for economic development is energy services.Footnote 65 It is the most important component of any development strategy.Footnote 66 Renewable energy can provide the needed energy for development. Electricity is needed for industrial development, to run industrial machinery and to meet the requirements of general services. Renewable energy has the potential to provide the energy for industrial and domestic use if developed. Justifying the development needs of energy, the World Bank notes that:
“Without access to modern energy services, the poor are deprived of opportunities for economic development and improved living standards. Modern energy services provide lighting, cooking, heating, refrigeration, transportation, motive power and electronic communications that are indispensable to increasing productivity, creating enterprises, employment and incomes, and accessing safe water and sanitation, as well as health and education.”Footnote 67
Renewable energy can promote access to energy in meeting these needs. With the absence of energy for development in most developing countries, where reliance has been placed on wood fuel to meet basic energy needs, it is important to shift to the abundant sources of renewable energy to promote development. Apart from providing access to energy services, renewable energy can create job opportunities and markets for investment and trade in renewable energy. The promotion of renewable energy will require capacity building in human resources, technology and financing in Nigeria. The creation of industries, market development, employment and poverty alleviation are important economic development stimulants, which renewable energy can offer in the short, medium and long term.Footnote 68 All these will have a positive impact on development. Energy access and low carbon transition can be said to present opportunities for developing countries wanting to attain sustainable development and human development goals.Footnote 69 Energy use is an important factor that contributes to development.Footnote 70
The diversification of Nigeria's energy portfolio will result in the development of industries and employment, an improvement in the economy and the creation of funds for the realization of development goals such as the Millennium Development Goals.Footnote 71 The absence of energy will have adverse effects on economic development and standards of living.Footnote 72 This is even more obvious as energy projects are linked to development initiatives.Footnote 73 The promotion of renewable energy for economic development is therefore important. A look at the Nigerian situation reveals this. Nigeria's population is currently 140 million and poverty affects about 54.7 per cent of the population.Footnote 74 Renewable energy can contribute to employment opportunities and improve standards of living provided there is equity in the distribution of energy services. By contributing to access to energy, industrialization and other economic activities will be enhanced. Overall, it will constitute another boost to the country's gross domestic product. Nigeria initiated the National Economic Empowerment and Development Strategy (NEEDS), an economic reform programme for 2001–07.Footnote 75 Under NEEDS, the government intended to address among other issues unreliable power supplies, job creation, diversification of the economy and industrialization. The development of renewable energy can contribute to achieving these goals. Currently, another economic programme entitled “Vision 20:20” has been initiated by the federal government. Achieving the goals of this programme is also dependent on energy access and renewable energy will be instrumental in arriving at the goals of the vision.Footnote 76
From the foregoing, it is submitted that the law can be used in achieving the objectives of renewable energy for the purpose of facilitating economic development. Thus, utilizing renewable energy for economic development by increasing its share in the energy mix through the law is as good as promoting economic development, considering the contribution of energy. This proposition sits in tandem with the position of proponents of law and development, who see the law as an instrument for the actualization of development objectives.Footnote 77
Environmental concerns
Electricity generation from fossil fuel remains a major cause of some environmental challenges in Nigeria. Nigeria's power sector is dominated by investors utilizing oil and gas for electricity generation. Economic activities from the exploration, production, processing and transport of oil and natural gas cause enormous challenges to land use, and water and air quality,Footnote 78 and cannot be said to guarantee sustainable development. The unsustainable exploitation of resources, instead of diversifying to renewable energy sources, will increase Nigeria's contribution to environmental problems. Currently, the problem of gas flaring has not been addressed in Nigeria. The country is characterized as an oil exporting developing country, leading in gas flaring.Footnote 79 Legislative measures towards addressing the problem of gas flaring in Nigeria have not yielded positive results.
The environmental problems resulting from oil and gas exploration, production and utilization are enormous. Generally, extractive industries have been criticized mainly because of environmental issues resulting from their activities.Footnote 80 Investment in the petroleum industry is broadly grouped into the upstream and downstream sector. The upstream is the industry's exploration and production sector, while the downstream is involved with the refining and production of crude oil, gas distribution and marketing of petroleum products. These activities are not without their environmental risks. For example, offshore petroleum activities include geological and geophysical survey, exploration, development and production, and decommissioning, which present a series of environmental risks.Footnote 81 The Nigerian cases of Shell Petroleum Development Company of Nigeria v Tiebo VII,Footnote 82Shell Petroleum Development Company of Nigeria v Isaiah,Footnote 83Seismograph Services v Mark,Footnote 84Ogiale v Shell Petroleum Development Company of Nigeria Footnote 85 and Shell Petroleum Development Company of Nigeria v Ambah Footnote 86 typify that the vast majority of claims for compensation for the operation of oil companies in local communities revolve around oil spillage claims for loss of income from fishing and farming, water pollution, damage to farmland and crops, and damage to health due to water-borne diseases.Footnote 87 For instance, in Tiebo VII,Footnote 88 the plaintiffs claimed in the court of first instance the sum of N 64,146,000 (approximately USD 322) as special and general damages arising from the defendant's negligence resulting in an oil spill on the plaintiffs’ lands, creeks, lakes and shrines from the defendant's oil mining activities, leading to loss of fishponds, and damage to communal fishing nets and raffia palms. Litigation claims for environmental pollution have been on the increase in Nigeria.Footnote 89
Of the environmental problems associated with fossil fuels, climate change has gained higher international attention. There is also a general notion held by the international community that renewable energy will contribute to reducing the impact of climate change. Thus the reduction of the threat of human-induced climate change to socio-economic sectors, human health, and ecological systems and the environment is a major problem that has called for global attention.Footnote 90 The problem of climate change has been attributed to the release of greenhouse gases into the atmosphere.Footnote 91 The Fourth Assessment Report of the IPCC identified that human actions are changing the earth's climate and creating major disturbances in human systems and ecosystems.Footnote 92 The coastal city of Lagos, Nigeria, has also been identified by the IPCC as being likely to be affected by rising sea levels by 2015.Footnote 93 Most vulnerable to the consequences of climate change are developing countries such as Nigeria because of their higher sensitivity and lower capacity to adapt to the consequences of climate change.Footnote 94 They are therefore easily affected by the stress of climate change, as they are not currently positioned to cope with its hazardous effects.Footnote 95 It is estimated that 1,350 square miles of land in Nigeria becomes desert each year, making farmers and herdsmen migrate from their homes.Footnote 96 Addressing the problem of climate change at both national and international fora becomes paramount. The law can be made to give credence to the use of renewable energy in addressing these current challenges. Incorporating climate change concerns into development and energy planning, and taking concrete action towards a low carbon or beyond-carbon development pathway is important.Footnote 97 The IPCC identified hydropower, solar, wind, geothermal and bio-energy as part of the key mitigation technologies and practices that are currently commercially viable. It also noted that feed-in tariffs for renewable energy technologies, renewable energy obligations, producer subsidies, biofuel blending, and renewable energy incentives or obligations have been shown to be policies, measures and instruments that have been environmentally effective.Footnote 98 These measures, as relevant to Nigeria, are discussed later in this article.
Besides, the international climate change regime gives credence to the use of renewable energy for climate change mitigation. The United Nations Framework Convention on Climate Change (UNFCCC) has as its ultimate objective the stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system in a sustainable manner.Footnote 99 The Kyoto Protocol to the UNFCCC (Kyoto Protocol),Footnote 100 which strengthened the provisions of the UNFCCC, set limits for greenhouse gas emissions in developed countries to at least 5.2 per cent below the level of the 1990s.Footnote 101 Both the UNFCCC and the Kyoto Protocol recognize the importance of renewable energy. The Kyoto Protocol specifically commits parties to “research on, and promotion, development and increased use of, new and renewable forms of energy … and of advanced and innovative environmentally sound technologies”.Footnote 102 Although Nigeria is not obliged to assume binding commitments under the Kyoto Protocol, steps to promote renewable energy will be seen as a show of solidarity or a moral duty.
The dominance of fossil fuel in the energy market is acknowledged.Footnote 103 The rise in demand for energy is an indication that the potential of using renewable energy in meeting climate change mitigation is limited, as energy consumption from fossil fuels will increase due to energy demands. However, the environmental case for renewables remains sound for countries such as Nigeria. For example, coal is the dirtiest of all conventional energy sources and, with the current global attention on mitigating climate change, the use of coal is being de-emphasized. This is another area that has been neglected by the government. Nigeria may decide not to exploit its coal potential because there are other abundant energy sources, such as renewable energy, which are more sustainable. The next section considers the environmental and social impacts of renewable energy vis-à-vis the benefits identified above.
DO THE ADVANTAGES OF RENEWABLE ENERGY OUTWEIGH THE NEGATIVE ENVIRONMENTAL AND SOCIAL IMPACTS?
An examination of the negative environmental and social impacts of renewable energy is necessary to balance the consideration of the positive impacts discussed above. Generally, all energy sources, whether conventional or renewable, have potential risks associated with them.Footnote 104 The impacts vary according to the source.Footnote 105 Depending on the type of renewable energy, some environmental and social impacts may arise. The impacts associated with the development of renewable energy are examined below with reference to some specific renewable energy sources. The first source examined is biomass.
Biomass can have a negative effect on land. Land meant for food production may be allocated or diverted towards the production of feedstock for biomass. Food production therefore competes with the production of biomass. The cultivation of large scale biomass crops also requires the use of fertilisers, which may have a negative impact on water bodies. The environmental effect of biomass is high. Biomass generates considerable air pollutants, contributing to greenhouse gases emissions. The pollution can have a negative effect on human health. However, when biomass from waste is burnt, that reduces the waste in the environment, thus creating environmental benefits. Combustion of biomass generates lower emissions compared with fossil fuel combustion. According to an argument of the United Kingdom Royal Commission on Environmental Pollution, the carbon dioxide released during the combustion of wood biomass is equivalent to the amount taken from the environment during the growth of the wood.Footnote 106 This argument has been supported by Akella, Saini and Sharma, who maintain the same position and further state that generating electricity from biomass is carbon neutral.Footnote 107 Therefore, biomass is more sustainable and can utilise feedstock which does not compete with food crops for land.Footnote 108
Biomass is derived from organic or biological materials.Footnote 109 It is obtained from crops, livestock waste, domestic and municipal waste. Biomass may be in solid form, such as straw or wood chips, or liquid such as vegetable oils. It can also be in gaseous form.Footnote 110 Biomass can therefore be utilized as a solid fuel or converted to gaseous form for fuel.Footnote 111 It can be purpose grown. Good examples include energy crops such as willow, miscanthus and poplar.Footnote 112 There are abundant feed stocks that can be used for the production of electricity from biomass. They include cassava, sugar cane, soya, sweet sorghum, oil palm, coconut among many others. It has been found that Nigeria generates about 227,500 tons of fresh animal waste daily.Footnote 113 One kilogram of fresh animal waste can produce about 0.03 m3 gas, so 6.8 million m3 of biogas can be produced from animal waste in the country daily. On the other hand, municipal solid waste generated annually in Nigeria is about 20kg per capita.Footnote 114 With increasing urbanization, municipal waste will also increase in the country and utilizing that as an energy source will avail the pollution nuisance arising from it.Footnote 115 Biomass technologies such biogas digesters can be utilized to generate biogas.Footnote 116 Thus, biomass technology will offer Nigeria an avenue or opportunity for creating “waste to wealth”.Footnote 117
In the case of electricity generation from hydro power projects, there could be impacts on the flow of rivers, ecosystems, wildlife and sea creatures, leading to soil erosion and changes in biodiversity.Footnote 118 Flooding is a major impact of hydroelectric dams.Footnote 119 Hydro power projects can also result in diseases such as malaria due to the contamination of dams. Hydro power has some huge impacts on land and projects may lead to land displacement. The land coverage of hydroelectric power is very large. This means that large expanses of land will be required for hydroelectricity generation.Footnote 120 The construction of dams can result in the displacement of communities as people may have to be evacuated. Hydroelectric usage of water may not only impact on land biodiversity and aquatic species, but the intense use of water for electricity generation can also lead to water scarcity for other industries.Footnote 121 The most mature renewable energy technology today is hydroelectric power.Footnote 122 Hydropower is derived from moving water. It uses earth's water cycle for generating electricity.Footnote 123 The technology for generating electricity from hydro is usually through the use of turbine engines. Hydropower can be categorized as large or small hydropower, depending on the size of the engines.Footnote 124 About 14,750 MW electricity potential from hydro is readily exploitable in Nigeria.Footnote 125 This can substantially meet the country's energy needs and create more jobs and investment. Particularly, Rivers Niger and Benue are economically viable sources for hydropower.Footnote 126
Regarding electricity generation from solar energy, the materials used in manufacturing solar photovoltaic and thermal cells contain chemical compounds such as silicon compounds, cadmium compounds, germane and polyvinyl fluoride that are injurious to health.Footnote 127 They can cause cancer and other deadly diseases.Footnote 128 Emissions from the fumes in the production process can cause respiratory disorders.Footnote 129 The hazards involved in the production process and the end of life cycle of the equipment raise serious health concerns. However, adequate health and safety measures in the production process and routine checks after production can reduce environmental hazards, and the potential impact on occupational and public health.Footnote 130 The impact of major, large solar technology development may affect land use requirements.Footnote 131 However, in comparison to wind energy and hydropower, land occupation for solar energy is minimal. The daily amount of energy received from the sun in Nigeria is estimated to be about 5.08 × 1012 KWh.Footnote 132 Harnessing solar using technologies with 5 per cent efficiency, covering 1 per cent of the surface area of Nigeria would result in the generation of 2.54 × 106 MWh of electricity per day, which is equivalent to 4.66 million barrels of oil.Footnote 133 Approximately 3.7 per cent of Nigeria's land would be needed for solar generation at levels equal to the country's conventional energy reserves.Footnote 134
In the case of wind, the likely negative impacts of wind technology are noise, vibration, blade throwing, obstruction of television or radio signals and microclimate modification.Footnote 135 The siting of wind energy turbines has been challenged, mainly because they are capable of causing noise pollution and aesthetical distortions. Land use problems may also occur, as land availability may be affected by the siting of wind turbines.Footnote 136 The migration patterns of birds can also be affected.Footnote 137 In offshore wind, the construction of turbines may also affect water transport and can lead to accidents, especially where turbines are constructed in such a way that they inhibit the right of innocent passage at sea. Communities and non-governmental organizations have in several instances objected to the siting of wind farms. There exists a plethora of cases challenging the approval of wind farms because of the environmental and social consequences. On the other hand, by their location, offshore wind installations are less likely to be challenged because of noise effects, aesthetics and diminished property values as may be the case with onshore wind installations.Footnote 138 Most of the negative impacts associated with wind energy conversion systems are inherently local. The problems can be checked and minimized through the use of modern technologies which reduce the negative impacts, safety measures, and technological standards in the process of manufacturing and constructing wind farm equipment and projects.Footnote 139
Wind supply is also variable, as is solar power.Footnote 140 The technology for converting wind into electricity can be through wind turbines, generators, plants, machines and dynamos.Footnote 141 Wind technology installations can be offshore or onshore. About 100 kilowatts of electricity can be generated from wind generation systems in the coastal areas of Port Harcourt, Calabar, Ikeja and Lokoja in Nigeria.Footnote 142 Using available technology, the potential can be harnessed to meet the country's energy needs. In the windy regions of the country, the installation of a 25 metre diameter wind turbine that has about 30 per cent efficiency can generate 97 megawatts of electricity annually.Footnote 143 However, the use of wind energy in Nigeria has not been encouraging, as there are scattered wind technology installations all over the country; these installations have been abandoned without maintenance.
While it is acknowledged that renewable energy sources have their various environmental and social impacts, those impacts are lower compared to those associated with conventional energy sources. The environmental case for some renewable energy sources is that they portray zero or lower emissions than conventional energy sources. However, this article contends that there are some renewable energy sources that may generate higher emissions depending on their efficiency and type. For example, large hydropower has a higher greenhouse gas potential and presents enormous environmental problems. Biomass may generate substantial amounts of greenhouse gases if efficient means of production are not employed. Nevertheless, the hazardous risks of the exploitation and utilization of renewables are very low when compared to conventional energy sources. Renewable energy sources cannot be depleted. They are inexhaustible, as described above.
Thus, renewable technologies are safer if one is considers the environmental and social problems associated with fossil fuel technologies.Footnote 144 With proper planning, regulation and public awareness, the impact associated with renewable energy can be reduced.Footnote 145 Comparatively, the environmental and social cost of fossil fuels is higher than that of renewable energy sources. Reconciling the need for the promotion of renewable energy and its associated impacts through adequate legislation, scientific and technological standards will enhance the benefits of renewable energy.Footnote 146 The benefits previously identified include climate change mitigation and energy security benefits, as well as economic opportunities.Footnote 147 While the net values of these benefits have been subject to debate, their potential has however generated interest among stakeholders.Footnote 148 McKinsey, while justifying the need to strike a balance between the law on birds, bat mortality and the promotion of renewable energy (from wind), notes that:
“It will not suffice to merely declare renewable energy as being valued and provide incentives for wind energy. The wind energy industry would argue that the United States must also clear the barriers it has presented to energy infrastructure development in the past where those barriers are out of balance with the harm protected against. The wind energy industry would emphasize that a bird killed for a megawatt-hour of renewable, non-foreign wind energy is much more acceptable than a bird killed for a unit of foreign-purchased or non-renewable energy.”Footnote 149
This quote aptly captures the conclusion that, though renewable energy sources may have certain social or environmental impacts, their advantages outweigh these impacts. Where renewable energy sources are carefully exploited, exercising appropriate caution in designing the measures to promote them, their impacts are less significant than those associated with conventional energy sources.Footnote 150 As identified above, the effects of petroleum activities and mining could be enormous, as seen in the instances of oil spills. The Jesse tragedy in the Niger Delta, which claimed over 1,000 lives, is a point of reference in pipeline disasters in Nigeria.Footnote 151 Renewable energy therefore offers a win-win approach to electricity generation, resulting in less impact on the environment when compared to other energy sources. These benefits will be realised through the use of the law.
LAW FOR THE PROMOTION OF RENEWABLE ENERGY IN NIGERIA
The impelling considerations for renewable energy require that it should be supported in Nigeria. The law has a role to play in meeting the considerations for renewable energy identified above.Footnote 152 Therefore, renewable energy law can be used in actualizing these energy policy objectives.Footnote 153 Regulating renewable energy will need to focus on the larger context within which renewable energy is being promoted and developed.Footnote 154 Regulatory intervention could affect investment decisions that will foster the benefits of renewable energy.Footnote 155 Developing a law for renewable energy will involve heterogeneous legislative measures. The basic considerations for a legal regime will include the development of support schemes, and ensuring that the law is aligned with the planning process, access to the grid, environmental impact assessments, access to land and licensing, in order to ensure that they do not constitute barriers to the promotion of renewable energy in Nigeria. These legal measures are set out below.
Renewable energy support schemes
The promotion of renewable energy in Nigeria will be guaranteed if it is supported by a legal framework that gives advantages or other benefits to utilities that are interested in investing in renewable energy in the power sector. Thus, the government can intervene in the power sector through making laws for feed-in tariffs (FIT), quota obligations, tendering, and financial and fiscal incentive schemes. These schemes are discussed below as options, starting with the FIT scheme.
The FIT scheme has been employed to promote renewable energy by obliging utilities to purchase generated renewable energy electricity at a fixed price for a specific period of time.Footnote 156 Under the classical FIT that has been practised in countries such as Germany, the transmission network operator is under the obligation to take and pay for electricity generated from renewable energy in accordance with the provisions of the law.Footnote 157 Investors in renewable energy generation are assured that electricity generated by them will be purchased. Nigeria introduced FIT legislation in June 2012.Footnote 158 By section 32(d) of the Electric Power Sector Reform Act of 2005 (EPSRA), the Nigerian Electricity Regulatory Commission (NERC) is required to ensure that the prices charged by electricity licensees are fair to consumers, and sufficient to allow the licensees to finance their activities in order to allow for reasonable earnings for efficient operation. Section 76 of the act further empowers NERC to design tariff methodologies to be used for the regulation of electricity prices. Pursuant to the powers given to NERC, the FIT has been designed for wind, solar, small hydro and biomass / biodiesel.Footnote 159
NERC set the tariff level taking into consideration that the FIT levels will be technology-specific and will depend on: investment costs for the plant; operation and maintenance costs; fuel costs (where applicable); financing costs and return on invested capital; estimated lifetime of the power plant; and capacity of the plant. Thus, tariff differentiation has been introduced and a look at the tariff set will indicate that inflation has been factored into the operation of the scheme.Footnote 160 The basic principles underlying the operation of the FIT are largely lacking. There is no provision for a priority purchase obligation or access under the scheme. The principal features of the FIT enshrined in Germany's Renewable Energy Sources Act are: imposition of a priority obligation to purchase renewable energy;Footnote 161 enhancement of security for purchase;Footnote 162 transmission and payment for electricity generated;Footnote 163 determining the rate of a good tariff;Footnote 164 guaranteeing a tariff rate over a specific period of 20 years;Footnote 165 differentiation of technology in the tariff in order to promote technological innovation;Footnote 166 providing an effective means of financing the scheme;Footnote 167 and clearly setting tariff digression.Footnote 168
Another option is the tradable quota scheme. The law for the tradable quota scheme obliges utilities to produce or utilize a certain amount of electricity from renewable energy sources.Footnote 169 A certificate is issued for units of electricity generated as evidence of compliance.Footnote 170 The certificate can be sold under defined rules in the same manner in which electricity is sold. Participating entities have the option to produce electricity from renewable energy sources or purchase certificates to meet their obligations.Footnote 171 There is usually a penalty for breach of the obligation. The defaulting entity in required to pay a fine for noncompliance.Footnote 172 This scheme has been prominent is in Australia, Belgium, Sweden, the United States and the United Kingdom.Footnote 173
Tendering schemes on the other hand involve competitive bidding for renewable electricity projects at a given price, in which the bidder with the lowest prices is awarded the project to generate renewable electricity at a given tariff.Footnote 174 The tendering scheme can therefore be employed to encourage investors to generate a specific capacity of electricity from renewable energy sources. The idea behind the tender mechanism is to enable the most economically effective bidders to be awarded the bid.Footnote 175 The usual practice is to pay project participants the difference in price between the amount of the tariff in the contract and the total price of electricity generated from conventional sources, which represents the additional cost of producing electricity from renewable energy sources.Footnote 176 Independent power producers in Nigeria can seize the opportunity offered by the scheme to increase the share of renewable energy in the power sector. Should Nigeria decide to make a law for the promotion of renewable energy through the use of the bidding system, it will be important that the paramount consideration for the award of the bid should be based on the ability to execute the project within the amount of the bid. It must be ascertained that, having bid for such a contract, execution will be feasible within the timeframe. Countries where this scheme has been used include China, France, Ireland and the United Kingdom.Footnote 177
Fiscal and financial schemes also provide support to investors or consumers, depending on the purpose they are meant to serve. They can be used to encourage investment in renewable energy projects. One way of addressing the high start-up cost of renewable energy installations and the difficulties involved in securing funding for projects is by securing government support in renewable energy investments, through direct grants, seed capital, low interest loans, loan guarantees or investment tax credits.Footnote 178 China has also promoted the development of renewable energy through the use of fiscal incentives.Footnote 179 The Production Tax Credit in the US, which offers tax credits for each unit of electricity output, is reputed to contribute to the deployment of renewable energy.Footnote 180 Generally, financial and tax-based incentives have been found to play a supplementary role to government policies aimed at encouraging the development of renewable energy technologies.Footnote 181 Making the schemes complement each other is desirable for the effective promotion of renewable energy in the Nigerian power sector.
Electricity licensing
The business of electricity generation in Nigeria is carried out by investors issued with generation, transmission, system operation and trading licences.Footnote 182 However, one megawatt of electricity can be generated without a licence.Footnote 183 The opportunities offered by EPSRA to generate one megawatt of electricity without a licence offer an opportunity for the redeployment of small scale renewable energy projects. This will also dispense with having to go through the hurdles of payment and procurement licences. However, preferential treatment through the acceleration of licensing for large scale renewable energy projects should be enhanced. The process for granting licences should not be allowed to operate as a barrier to the promotion of renewable energy in Nigeria.
Environmental impact assessment
In respect of environmental impact assessment, it would be important, when developing a law for renewable energy in Nigeria, to carry out a review of the Environmental Impact Assessment Act and other relevant legislation to determine whether they are compatible with the promotion of renewable energy or likely to constitute barriers to the promotion of renewable energy. Private and public entities are required to comply with the provisions of the Environmental Impact Assessment Act in the construction of projects.Footnote 184 The impact of renewable energy projects must be considered. It suffices to state that Nigeria has detailed provisions on environmental impact assessments and the steps to be taken when constructing projects.
The EPSRA recognises the need for environmental impact assessments for energy projects in Nigeria.Footnote 185 The legal framework for renewable energy support schemes can also restate the need for projects to comply with the requirements of environmental impact assessments for them to be eligible for support under the scheme. The law can further ensure that the process for environmental impact assessments and the requisite documentation are straightforward, and do not operate as barriers to the deployment of renewable energy sources in the electricity sector. The environmental impact of renewable energy projects can be reconciled with the advantages of renewable energy in order to determine whether a project should be approved or whether it should be challenged on the grounds of environmental impact.Footnote 186 Thus, the role of the approving entity is important. Energy projects require certification from the Ministry of Environment.Footnote 187 It will be normal that there are grounds for petition and the ministry could play a quasi-judicial role where petitions are brought before it. Besides, the ministry will need to form an opinion as to whether a project should be approved or not based on stated guidelines. Through directing a petition to the ministry, individuals and groups could exercise their right to bring an action in court, as guaranteed under the constitution.Footnote 188 The court will therefore exercise its competence in resolving competing claims. It will be instructive that the approving authority should base its decision on the likely impact of projects vis-à-vis their benefits.
Planning approval / permits
Planning approval is an important area to explore. Planning laws could constitute barriers to the deployment of renewable energy if there is bureaucracy to be overcome in the process of approving renewable energy projects.Footnote 189 Consideration should be given to the procedure for approvals. The law needs to accommodate renewable energy projects. Renewable energy projects should be able to be developed in such a way that they are not in conflict with planning laws. The law promoting renewable energy can set out in general terms the need for compliance with planning provisions to ensure eligibility for the requisite support.
Streamlining approval processes will also be very important in order to avoid barriers to the promotion of renewable energy.Footnote 190 It is an important consideration which Nigeria must take into account for renewable energy projects; otherwise the problem may arise from neighbourhoods or communities challenging the installation of renewable energy equipment or projects. Such claims could be frivolous or legitimate depending on the circumstances. The approving body or court, as the case may be, will need to consider the overall importance of the project and the extent to which there is a breach of planning rules. The need for a legal regime which will effectively balance competing claims will be desirable in the circumstances. It would be worthwhile to identify the extent to which the legal regime for planning in Nigeria will impact on the promotion of renewable energy investments and installations. Communities and individuals could challenge installations, leading to delay; there could also be delays in the approval process. The law will need to ensure that planning does not constitute a barrier to the deployment of renewable energy in Nigeria.Footnote 191
Grid connection and access
The connection of renewable energy to the grid is also a critical consideration in the promotion of renewable energy. The situation is very challenging in that, in Nigeria, access to the network and grid is based on the principle of non-discrimination.Footnote 192 No preference is given to any particular form of electricity generation. Nigeria will need to consider improving its grid and electricity network and give consideration to granting priority access to electricity generated from renewable energy sources. The International Energy Agency supports the important role of complementing the support schemes with guaranteed and priority access to the electricity network when it states that: “[f]or all of the mechanisms to work properly, it is important that renewable electricity has a guaranteed connection to the grid and preferential access. Otherwise, system operators may not connect or may curtail renewable generators.”Footnote 193 Access to the grid and network remains a critical legal consideration.
Incentivizing the connection to the grid through the availability of financial incentives to reduce costs will enhance improvements to the grid connection for renewable electricity. In the light of the need to promote renewable energy, it will be important for renewable energy to be granted unconditional access to the grid or network. Independent power producers should be guaranteed access where they have invested in the generation of electricity from renewable energy sources. Nigeria would have to create enabling incentives for improvements in the country's electricity network.
Land use and rights
Another area for legal intervention relates to the promotion of renewable energy and the regime for the ownership and acquisition of land. The EPSRA has laid out the procedure for the acquisition and grant of land for electricity projects.Footnote 194 Reconciling the acquisition of land for renewable energy projects from individuals and communities, with the rights of individuals and communities to own land in accordance with the rights enshrined in the constitution and in international human rights law, will be important considerations for law making.Footnote 195 The court in this regard also has an important role as it may be called upon to reconcile the claims of land owners and investors in renewable energy projects.Footnote 196 This further shows the role of the law in ensuring that likely claims are resolved in a way that does not jeopardize investors’ interests, or the rights of individuals and communities.
CONCLUSION
This article has examined the rationale for the promotion of renewable energy in Nigeria. There are compelling reasons why the law should play a role in promoting renewable energy in the Nigerian power sector. Renewable energy is important in realising energy security and access, climate change mitigation and economic development. It is the submission of this article that the justifications identified are sufficient grounds for the development of a legal framework to enhance the integration of renewable energy in the Nigerian power sector, despite the abundant deposits of oil and gas reserves in Nigeria. The benefits derived from the promotion of renewable energy outweigh its negative environmental and social impacts. Similarly, the benefits of renewable energy sources have been shown to outweigh those of conventional energy sources. Therefore, reconciling the impacts of renewable energy and its promotion will enhance the utilization of the benefits of renewable energy in Nigeria.
It is expected that renewable energy should play a role in Nigeria, if supported by a legal framework promoting renewable energy. The main support schemes that have been employed in promoting renewable energy include quotas, FIT, a tendering scheme, and financial and fiscal incentives. They can be employed through the law to promote renewable energy in Nigeria. Legal considerations for reforming the law include planning approvals, access to the grid, environmental impact assessments and access to land, as they connect to renewable energy projects. Thus, affirmative law will be required to transform the Nigerian power sector to ensure the promotion of renewable energy.
