Clean energy campaign has been getting more support from both political and business leaders since the newly elected US president Joe Biden returned the country to the Paris Climate Accord.
The US pro green leadership has been steering its allies to the path of energy transition to meet the 2050 zero-carbon emission goal. As a result, companies and countries have been working on plans to transit to cleaner energy with zeal never seen before.
Reuters reported that Japan on Monday pledged to offer $10 billion financial aid for decarbonization projects in Asia, such as renewable energy, energy-saving and conversion to gas-fired power generation from coal-fired power to help with an energy transition.
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In a virtual meeting with ASEAN energy ministers, Japan’s Minister of Economy, Trade and Industry Hiroshi Kajiyama proposed various support measures for the region, including helping each country set a realistic path towards carbon neutrality and develop a roadmap to achieve it.
“We propose the Asian Energy Transition Initiative as a package of Japanese support for realistic transitions in Asia towards carbon neutrality,” Kajiyama told the meeting, in which 10 ASEAN countries participated.
The financial support, including lending and investments from the Japanese public and private sector, will target projects to help cut carbon emissions and contribute to each country’s carbon neutral target, Takeshi Soda, director for International affairs at the industry ministry, said.
These projects will include building gas-fired power stations and liquefied natural gas (LNG) receiving terminals as natural gas is considered an alternative to coal and a key transition fuel, he told Reuters by phone.
“There has been a rapid progress in divestment in fossil fuel projects in the international finance industry,” Soda said.
“But to achieve carbon neutrality in ASEAN, it is important to create a mechanism to attract investment and financing for a variety of projects and technologies that contribute to an energy transition,” he said.
While it is a good move for the environment, it spells doom for oil-dependent economies like Nigeria. Asia was the first largest destination region of crude oil in the last quarter of 2020, whose exports from Nigeria reached over 880 billion Naira, approximately 2.2 billion U.S. dollars, according to data from Statista. Although the export value of crude oil from Nigeria to Europe amounted to about 853 billion Naira, approximately $2 billion, a hastened shift to cleaner energy in Asia will hurt the chances of Nigeria’s economic recovery.
The pandemic, which crippled industrial activities globally, plummeted oil prices, shattering Nigeria’s economy and leaving its recovery mainly at the mercy of oil market rebound.
But as economies gradually open, oil prices are coming back up, keeping Nigeria’s economy chances of recovery alive. Crude oil price has gone up $74 as of Monday, its highest level since 2018. Bank of America said oil could hit $100 per barrel next year as demand outstrips supply.
These offer hope of bountiful harvest to Nigeria. But with Japan’s $10 billion pledge to hasten transition to cleaner energy in Asia, the African largest economy may be losing a regional customer base that will greatly undermine its revenue generation, and consequently hurt its chances to bounce back from economic turmoil.