Charting a Fair Path: The Imperative of Reforming Oil Industry Divestment for Nigeria’s Just Energy Transition

Clean Technology Hub
5 min readFeb 2, 2024

*Victor I. Fagorite, PhD

Since the time of the industrial revolution, fossil fuels have been the driving force behind remarkable progress and advancement. However, this progress has come at a significant expense to our climate. Consequently, we find ourselves in a state of urgency when it comes to the climate crisis. To prevent a catastrophe, we must now make a drastic shift towards a sustainable future that achieves net-zero emissions. This transition needs to occur swiftly, while also ensuring that it is fair and inclusive.

At COP26 in 2021, His Excellency President Muhammadu Buhari declared Nigeria’s dedication to achieving carbon neutrality by 2060. Shortly after, Nigeria introduced its Energy Transition Plan (ETP), emphasizing the significant effort required to reach the 2060 net zero objective while also addressing the nation’s energy requirements. Following the announcement, the Climate Change Act 2021 was ratified, the ETP received full approval from the Federal Government, and an Energy Transition Implementation working group (ETWG) was established under the leadership of His Excellency Vice President Yemi Osinbajo (SAN). The ETWG consists of various important ministers and is supported by an Energy Transition Office (ETO).

Nigeria, a nation blessed with abundant oil reserves, has long been dependent on its petroleum industry. However, the environmental and social repercussions of this reliance are increasingly evident, compelling the nation to reevaluate its energy portfolio. The existing divestment practices in the oil industry must be reconsidered to align with the principles of justice, inclusivity, and environmental sustainability. Despite being a major contributor to the country’s economy for decades, Nigeria’s oil industry has also been a source of environmental degradation, corruption, and social unrest. As the world transitions to low-carbon energy alternatives, Nigeria must reform its oil industry divestment practices to ensure a just energy transition.

Concept of Just Energy Transition

By and large, just energy transition is a concept of greening the economy in a way that is fair and inclusive to all communities, workers, and businesses. The International Labor Organization (ILO) provides the following definition: “Ensuring the economy becomes greener in a manner that is equitable and inclusive for all individuals involved, generating opportunities for decent employment, and ensuring that no one is left behind.”

While this provides a sound basis, perception does vary between countries and regions. It is emerging in the global dialogue around decarbonization and net zero, and it offers immense opportunities for tackling climate change and advancing the SDGs. The World Economic Forum explains that a just energy transition can create green jobs and is critical to address the global challenges of the energy system and ensure universal access and social justice.

The 8 core principles of a Just Energy Transformation based on the UNDP Sustainable Energy Hub, as set out by the Alliance for Just Energy Transformation (AJET) aim to outline a shared understanding towards successful implementation of Just Transition policies worldwide, even as the details of the transitions differ at national scales. This could further provide a means of achieving a just transition from the oil and gas sector to a greener sector in Nigeria. They include:

  1. Be guided by science and understand the urgency to reduce emissions in line with the goals set out by the Paris Agreement.
  2. Be fair and uphold the rights, needs and values of everyone no single group should be privileged over others and the upfront costs must not fall on those with the least responsibility for climate change or ability to bear them.
  3. Be sustainable, ambitious and consistent with wider, holistic strategies that contribute to the energy transition needed to limit global temperature increase to 1.5 ᐤC, or well under 2ᐤC.
  4. Be comprehensive, transparent and inclusive which requires that just transition strategies developed at the national level to be co-designed and implemented at the local level.
  5. Ensure clearly defined, robust and meaningful stakeholder engagement and social dialogue, including a specific focus on social protection and gender equality policies to promote equitable access to benefits.
  6. Be centered on climate justice so that the burdens of climate change, as well as the costs of avoiding it, are shared fairly; both internationally and inter generationally. Implementation of the transition must support jobs, local communities and improve human wellbeing in the developing world.
  7. Recognizing energy access as an essential contributor for social wellbeing, economic growth, enabler of sustainable development and improved livelihoods and transformation of energy systems must enable large scale access to clean, safe and reliable energy to meet developmental needs of all.
  8. Ensure access to justice, decision making and information; A common approach to investment which upholds indigenous and local community rights. Recognition and implementation of the right to meaningful participation in energy transition decision making processes for all stakeholders, acknowledging and compensating for differences in resources and capacity to engage.

Need for Oil Industry Divestment

According to a report by Rick Steiner and Iniruo Wills, oil divestment in Nigeria is being conducted without effective government oversight. Multinational oil corporations are currently offloading precarious, less profitable properties in socially disadvantaged regions to local oil corporations that have significantly weaker environmental regulations. As a consequence, this is leading to increased carbon emissions and environmental harm. It is predicted that this pattern will persist, eventually resulting in all onshore and nearshore properties in the Niger Delta being owned and managed by domestic corporations by 20306.

To achieve a just energy transition, Nigeria must reform its approach to oil industry divestment, decommissioning, and abandonment. The government must provide effective oversight to ensure that the new operators conduct due diligence on the acquired assets and have the financial and technical capacity to safely manage these complex operations6. The government must also ensure that the new operators adhere to high environmental standards and are held accountable for any environmental damage caused by their operations6.

In addition, Nigeria must diversify its economy to reduce its dependence on oil revenue. The government must invest in renewable energy alternatives and create an enabling environment for private sector investment in the sector. Especially by creating financing in the form of climate finance. This will, in turn, create new jobs and opportunities for Nigerians while reducing the country’s carbon footprint. Green jobs, for instance, in the areas of solar energy utilisation, e-mobility and climate smart agricultural technologies. These green technologies could further be accessed by disadvantaged communities in both the rural and urban areas in Nigeria.

Nigeria needs to revamp its practices of divesting from the oil industry to ensure a fair transition towards sustainable energy. The government should implement effective supervision to guarantee that the new operators comply with strict environmental regulations and are held responsible for any harm caused by their activities. Moreover, Nigeria should also strive to diversify its economy, reducing its reliance on oil revenue and investing in renewable energy alternatives. By taking these measures, Nigeria can achieve a smooth transition towards sustainable energy that benefits all its citizens.

Victor I.Fagorite is Senior Manager Research at Clean Technology Hub.

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