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Energy

Nigeria’s energy future: Why investors should look to hydrogen 

Hydrogen is more than a Chemistry class molecule; it can be used as fuel to power vehicles, machinery and buildings – with zero emissions.

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As part of the race to net zero, and in line with commitments by countries of the world to realise the objectives of the Paris Agreement, investment in what may be considered a novel energy form in this part of the world- hydrogen – has been on the rise. As it turns out, hydrogen is more than a Chemistry class molecule; it can be used as fuel to power vehicles, machinery and buildings – with zero emissions.

According to the International Energy Agency, demand for hydrogen has grown more than threefold since 1975. With the need to diversify the energy mix and provide for cleaner fuels that can power heavy machinery, hydrogen has become a go-to fuel for the energy transition.

While countries like Japan, Germany, UK, US, China and even Saudi Arabia have started making significant investments and leading projects in hydrogen fuel production, we have not seen much traction in Nigeria, save for the mention of hydrogen in the 2018 National Energy Policy.

READ: Africa’s electricity generation will double by 2030, fossil fuel to be dominant – Research

Morocco on the other hand has recently entered into a partnership with Germany to develop the first green hydrogen plant in Africa, while South Africa is working arduously to expand local knowledge in hydrogen technology.

Nigeria’s failure to look critically into this development is a colossal mistake, particularly noting the advantages of hydrogen fuel, the increasing financing and technological commitments to it by developed countries as well as the investment in hydrogen fuel technology projects by big oil companies like Shell. Companies like Total, Eni and Repsol have equally bet on hydrogen and the reasons for this are not far-fetched.

The fuel has been referred to as the holy grail of the green energy transition. While grey and blue hydrogen produce emissions, as they are sourced from extraction from fossil fuels and carbon capture respectively, green hydrogen which uses renewable energy to split water molecules to realize hydrogen, has no carbon emission in its production or use.

READ: Nigeria to build 142 agro-processing centres

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Added to that, hydrogen has several advantages over traditional solar or wind energy. Perhaps topping the list is that it does not require battery technology, but can in fact, act as a storage mechanism for energy through the use of hydrogen fuel cells, which last longer than batteries.

The aviation industry, which has been the object of bad press over its emission levels, is also very keen on hydrogen as it comes as a cleaner alternative to jet fuel and can fill the gap where battery-powered renewables could not, without the concern of extra weight.

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Hydrogen also boasts of high-efficiency levels and high heating value, and as such is able to power large machinery and industries – an area where critics have decried the failure of solar and wind technologies. According to the Connecticut Hydrogen Fuel Cell Coalition, a stationary hydrogen fuel cell can have an efficiency level that exceeds 80 percent, with 2.2 pounds of hydrogen gas containing about the same amount of energy as 6.2 pounds of gasoline. Feedstock supply risk is also obliterated as hydrogen has been recorded as the universe’s most available entity, with no possibility of depletion.

READ: What the ANOH deal means for Nigeria’s energy market 

Another big point for hydrogen is its ability to combine with other fuels like natural gas, and to use natural gas infrastructure like pipelines for transport. According to Tony Attah, MD/CEO of Nigeria LNG Limited, “Natural gas is surely a cleaner fossil fuel but hydrogen is coming with a big bang too. Japan may soon become energy independent on hydrogen.”

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Indeed, Japan prides itself on being the hydrogen leader of the world, and only last December, launched its first liquefied hydrogen ship. The Hydrogen Council estimates that the international hydrogen market could be worth up to US$2.5 trillion by 2050, meeting 18 percent of global energy demand and reducing carbon dioxide emissions by 6 gigatonnes per year.

Sean McLoughlin, head of industrials research for the EMEA Region at HSBC, commented with respect to the hydrogen fuels market, “There’s a lot of capital that is very ESG-focused chasing a select number of companies that offer this kind of pure-play exposure to these future energy trends.” The trend of investment points significantly to the fact that Europe is heavily invested in green hydrogen and sees Africa as the frontier for production.

READ: FLNGs as the future: Too soon to call?

With the strategic positioning of both continents and the existing cross-continental energy trade, production of green hydrogen from Africa’s rich renewable energy sources for export to Europe looms, and Nigeria is a prime destination for this activity. It is telling that last year, the European Investment Bank (EIB) provided more than €3 billion of new financing across Africa which includes financing for climate-related investment and sustainable development.

Also, at least €30 billion has been earmarked by the EU for sub-Saharan Africa under the new Neighbourhood, Development and International Cooperation Instrument (NDICI) for the period 2021 to 2027, with a focus on climate objectives.

Other pointers include the fact that Saudi Arabia, the biggest oil producer in the world, is building the largest green energy and ammonia plant in Neom, touted as the ‘city of the future.’ Also, China is aiming for more than 1 million hydrogen-powered vehicles to be in service by 2030. These projects will certainly impact fossil fuel demand negatively, but the winners will be those investors who move early to new markets like hydrogen.

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Caleb Adebayo is an LLM Candidate, Energy and Environmental Law at New York University School of Law. His interest lies at the intersection of Energy, Environment and Finance and he is keen on the interplay between Law, Policy and Energy Markets. Prior to taking up his LLM, he worked on the Energy team of a tier 1 Nigerian law firm. A nominee for The Future Awards Prize for Lawyers, he has written widely on the subject of Energy and Environmental Law. He is also a member of the New York City Bar Energy Subcommittee

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Business News

Power Minister explains why power outages have risen

The Minister cited a breakdown of some National Integrated Power Plants supplying electricity to the national grid as being behind the recent power outages.

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The Minister of Power, Engr. Sale Mamman explained why power outages have increased in Nigeria citing a breakdown of some National Integrated Power Plants supplying electricity to the national grid.

The Minister disclosed this in a statement on Thursday morning, assuring Nigerians that the FG is working assiduously to restore the National grid to its previous historical levels and exceed that.

READ: Despite $1.6bn investments, Nigeria’s national grid still worrisome

What the Minister is saying

  • I sincerely regret the recent power outages across the Nation and the difficulties it has brought with it.
  • The problem is caused by the breakdown of some National Integrated Power Plants supplying electricity to the national grid. The plants are namely, Sapele, Afam, Olonrunsogo, Omotosho, Ibom, Egbin, Alaoji and Ihovbor. The Jebba Power Plant was shut down for annual maintenance.

The Minister added that seven power plants are currently experiencing gas constraints including Geregu, Sepele, Omotosho, Gbarain, Omuku, Paras and Alaoji while Shiroro hydroelectric power plant has water management issues.

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Business News

BUA Group, French company announce progress in 200,000 bpd refinery project

This is coming about 6 months after both firms signed an agreement for the supply of process technologies and the design of the facility.

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The BUA Group and Axens, a French-based petroleum technology company, have both signed a progress acknowledgement statement for the proposed BUA multi-billion-dollar integrated 200,000 barrels per day refinery in Akwa Ibom State.

This is coming about 6 months after both firms signed an agreement for the supply of process technologies and the design of the facility.

BUA, while making the disclosure in a statement on Wednesday, April 14, 2021, said that the French President, Emmanuel Macron, commended its Chairman, Abdul Samad Rabiu, for his commitment to developing lasting relationships between French and Nigerian businesses.

READ: What the $1.5 billion Port Harcourt refinery deal means to us – Maire Tecnimont

The statement said that this came as the French Minister for Foreign Trade and Economic Attractiveness, Franck Riester, paid a visit to the BUA Group Headquarters in Lagos where he handed over a personal invitation from Macron to Rabiu to attend the Choose France Summit in June in Paris representing business leaders from Nigeria and Africa.

The French minister also witnessed the signing of a progress acknowledgement statement between BUA Group and Axens of France for the proposed refinery project, according to the statement.

The statement also said that during the visit, it was announced that the BUA chairman had been appointed Chairman of the France Nigeria Investment Club.

READ: FG reacts to reports of revoking 32 refinery licenses

While thanking the minister and Macron for their unwavering support in bringing BUA and French businesses together, Rabiu said BUA had so far initiated partnerships and had developed personal relationships with a few French businesses, including Axens.

He expressed confidence in the quality of expertise and technical know-how of the French companies BUA had partnered with.

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Rabiu pointed out that the BUA refinery would reduce the huge cost of transporting Nigerian crude offshore, refining it and bringing it back into the country when fully operational.

READ: Abdulsamad Rabiu’s stake in BUA Cement has increased by N1.2 trillion in value since listing in 2020

He said that the choice of Akwa Ibom for the refinery was due to the huge availability of raw materials and its proximity to export petroleum products to regional countries.

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The President of Axens, Jean Sentenac, in his statement, said he was pleased that the project was advancing on schedule and expressed delight for the very good cooperation between all the involved parties, reiterating the commitment of Axens in delivering the BUA Refinery Project on time and with the highest standards.

READ: FG to open LPG distribution channels in all local governments

Bottom line

The completion and take-off of the refinery owned by the BUA Group would come as a huge boost for the Federal Government’s effort to stop the importation of refined petroleum products, ensuring that the country becomes a net exporter of these products.

This will also help to conserve the scarce foreign exchange as the completion and take-off of the Dangote refinery and other similar refinery projects will help ensure self-sufficiency in the country.

The BUA Group, just a few days ago, was listed as one of the companies with an active refinery license from the Department of Petroleum Resources (DPR).

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