The vice president, Prof Yemi Osinbajo, has said Nigeria’s position on the call for a just transition and the debt-for-climate swap deals can be a win-win for debtors and creditors.
He said this recently during the National Economic Summit, organized by the National Economic Summit Group (NESG), which held in Abuja.
Prof. Osinbajo said:“We must continue to call for a just transition that enables us to use our abundant gas resources to meet our energy needs, including for electricity and cooking. This will enable us to secure the resources needed for investment in natural gas, as well as in renewable forms of energy. I am happy that this matter is on the table at the ongoing COP-27. It should be pursued to its logical conclusion of securing additional finance for developing economies.”
A debt-for-climate swap is a type of debt swap where bilateral or multilateral debt is forgiven by creditors in exchange for a commitment by the debtor to use the outstanding debt service payments for national climate action programmes. How debt-for-climate works: In September 2022, Prof. Osinbajo visited Washington DC to seek partnerships for the implementation of Nigeria’s energy transition plan. During his visit, he provided some insights into debt-for-climate deals in a lecture. He said:
“Typically, the creditor country or institution agrees to forgive part of a debt, if the debtor country would pay the avoided debt service payment in a local currency into an escrow or any other transparent fund and the funds must then be used for agreed climate projects in the debtor country, increase the fiscal space for climate-related investments and reduce the debt burden for participating developing countries. For the creditor, the swap can be made to count as a component of their Nationally Determined Contributions (NDCs).”
Carbon markets: Osinbajo also highlighted the fact that African countries should explore the potential of carbon markets on the continent to help raise essential resources to tackle climate change impacts.
Nairametrics had earlier reported the launch of the Africa Carbon Markets Initiative (ACMI) launched at COP 27. According to Osinbajo, Nigeria could produce up to 30 million carbon credits per year by 2030. 30 million carbon credits at $20 per credit would be worth over half a billion dollars annually for the Nigerian carbon market.
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Renewable energy: Osinbajo also said Nigeria must press its advantage in renewable energy because future jobs and opportunities will be found in the green economy. According to him, the Solar Power Naija Programme, launched under the Economic Sustainability Plan, which is designed to achieve 5 million solar connections that would impact over 25 million Nigerians will contribute in this regard. But the impact includes opportunities in manufacturing and maintaining solar equipment and facilities.
For the record: During a November 14 meeting at COP 27, representatives from developing countries urged developed countries to fulfil their climate finance pledges. However, progress reports presented at the meeting showed that developed countries have reached about $80bn/year in finance and are on track to exceed $100bn as early as next year.