By Oladele Ajayi
The Nigerian Extractive Industries Transparency Initiative (NEITI) informed lawmakers that Nigeria would need 1.9trillion USD to achieve energy transition in line with its net-zero commitment under the Paris Agreement. Nigeria is a signatory to the Paris Agreement where it commits to drastically reduce greenhouse-gas emissions by 47% by 2030, and achieve net-zero by 2060.
Green Premium is simply the additional sum incurred for choosing renewable energy product over fossils. It is the difference between carbon-neutral products and green-house gas (GHG) emissions. When ‘B’ chooses to use solar energy as opposed to relying on electricity from the national grid, the extra cost ‘B’ spends on that clean solution is green premium. According to the Climate Change Performance Index (CCPI), Nigeria has high rating in GHG emissions. Although plans have been established on how to reduce GHG emissions, they are yet to be completely implemented. Accessible climate finance will be instrumental in achieving these plans, since renewable energy sources are cost-intensive. In a recent news, it was gathered that President Bola Tinubu would be advancing the Nigeria’s commitment to achieving sustainable development in the renewable energy sector, at the 2026 Abu Dhabi Sustainability Week in UAE.
Originally, green premium helps governments to raise short-term funds to finance energy transition plans, but in a bid to encourage clean transition in alignment with its Paris commitment, and reduce green premium on renewable energy, the Nigerian government has made strategies to propel greener and cheaper renewables through the provision of off-grid subsidies, and the 5% fuel surcharge paid on petroleum products.
In order to ease the financial burden, the Nigeria’s energy transition towards net-zero emission could be realized through strategic partnerships, DFIs, private capital and other climate finance mechanisms.
