Renewable Energy and ESG
Renewable Energy according to the National Renewable Energy and Energy Efficiency Policy
(NREEEP) 2015 is defined as the energy obtained from energy sources whose utilization does not
result in the depletion of the earth’s resources. Renewable energy includes energy sources and
technologies that have minimal environmental impacts, such as less intrusive hydros and certain
biomass combustion. This source of energy includes solar energy, wind, biomass, small and medium
hydro, geothermal, tide and wave energy. This means that renewable energy is a form of energy
derived from regenerative earth resources which do not deplete.
The Nigerian power sector is governed by the Electricity Power Sector Reform Act (EPSRA) 2005
which established the Nigerian Electricity Regulatory Commission and the Rural Electrification
Agency. These agencies are aimed at regulating the Electricity sector in the country and also
expanding the Main grid, developing isolated mini-grid systems and promoting renewable energy
ESG is an acronym for Environmental, social, and Governance. It is a term which is often used in
the context of investing. Which has however evolved into health and safety issues and a pollution
reduction. More recently, ESG has been promoting renewable energy by supporting net zero and
decarbonization. Therefore, ESG focuses on regulation in managing and reducing pollution in the
pursuit of economic growth.
In Nigeria, the government in line with the ESG has played a major role in the development of
renewable energy, especially towards economic growth and sustainable development. These can be
inferred from the laws and regulations in the energy sector such as the Renewable Energy Master Plan
(REMP) 2005. REMP aims at increasing the supply of renewable energy from 13% of the total energy
generated to 36% by 2030. This has led to collaborations with foreign governments such as Germany and the USA to provide access to solar power and other forms of renewable energy in rural areas.
Also, in a bid to reduce economic hardship donned by Covid 19, the Nigerian government launched
the Solar Power Naija Project as part of the Economic Sustainability Plan.
In addition to the EPSRA, there are other laws in place in Nigeria for the generation, transmission and distribution of renewable energy. The Environmental Impact Assessment Act 1992 seeks to stop the negative impacts of power generation and extraction on the environment. The Nigerian Electricity Management Service Agency Act 2015 aims to enforce and maintain the standards in power distribution. The Climate Change Act of 2015 aims to achieve low greenhouse gas emissions. All these laws show that Nigeria is actively involved in the process of promoting renewable energy.
However, the development of renewable energy is not without challenges. Some of the major
challenges being met are the high cost of renewable energy projects and there is insufficient access to funding and investment. Also, governmental policies towards renewable energy projects are
sometimes unstable. For instance, in February 2020, the Federal Government published in the official Gazette that renewable energy equipment should be exempted from paying VAT concerning importation and sale within Nigeria.
However, the Federal Inland Revenue Services (FIRS) in their public notice included renewable
energy equipment under items not exempted from VAT as it will continue to attract the applicable
7.5% charge. It should be noted that public notices from the FIRS are mere notices and cannot
replace laws, however, they may still discourage investors.
In January 2023, the Renewable Energy Roadmap for Nigeria was developed in collaboration with
the Energy Commission of Nigeria. The roadmap encompasses all of Nigeria’s energy systems and
analyzes the additional renewable energy deployment potential up to the year 2050. The Roadmap
focuses on how to help Nigeria meet its energy needs and also power sustainable economic growth
and create jobs while attaining global climate and sustainable development goals.
In conclusion, the actions needed to realise a future with clean energy are diverse and they include
policy, regulatory and financial-related actions to place Nigeria on the path to a transformative
future in line with the ESG objectives.
International Renewable Energy Agency: Renewable Energy Roadmap Nigeria