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Geneva, May 20, 2015 - Reducing black carbon emissions could prevent millions of premature deaths annually and play an important role in the global fight against climate change. Yet despite these benefits, an array of black carbon abatement measures that are technically within reach have not yet been financed and deployed to their full potential.
A report released today by the Climate and Clean Air Coalition (CCAC) finds that existing funds are already in a position to finance businesses, activities, technologies, and policies that will contribute to cutting black carbon emissions, and that several black carbon-rich sectors are
sufficiently mature to absorb finance. The report also outlines key strategies and steps needed to scale up black carbon finance over time. The work was led by the World Bank Group, a co-leader of CCAC’s Finance Initiative.
At the launch of the ‘Black Carbon Finance Study Group Report’ Christian Grossman, Director of the World Bank’s Climate Business Department, Climate Change Group, said the rapid implementation of measures to reduce black carbon in a range of sectors would deliver multiple benefits and near term results in health, climate and other areas.
“We need to urgently find ways to reduce emissions of black carbon and other short-lived climate pollutants on a wide scale,” Mr. Grossman said. “Public and private financiers can and need to adopt black carbon performance measurements to direct new and existing financial flows toward technology that can lower these emissions.”
“This shift can start today in sectors like municipal transport and residential clean cooking spaces where investment already exists and performance management tools are nearly or already in place. We should also increase our efforts to strengthen these tools in other sectors to create an
environment where finance for black carbon can be made available on a much wider scale.”
Helena Molin Valdes, Head of the Climate and Clean Air Coalition Secretariat, welcomed the report and said Coalition partners were active in numerous black carbon mitigation initiatives across multiple sectors.
“Black carbon is a major-contributor to near term climate change. It increases the melting of ice and glaciers, harms public health, reduces food security and disrupts weather patterns. It is also a major threat to health, shortening the lives of millions of people every year,” Mrs. Molin Valdes said. “There is important work to be done and with strategic financing and increased investment we can protect lives and rapidly decrease short term climate impacts.”
The report recommends funding the development of black carbon performance standards so that investors can screen potential projects to ensure that activities are reducing emissions and achieving climate and health benefits. However, practical steps can be taken immediately in the diesel transportation and residential cooking sectors.
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According to the World Health Organization indoor air pollution, of which cooking is leading contributor, causes approximately 4.3 million premature deaths a year. Programs to improve cookstoves are underway in many parts of the world. Mrs Bahijjahtu Abubakar National Coordinator, Renewable Energy Programme, at the Federal Ministry of Environment, Nigeria, says that their cookstove program has created a range of benefits in her country.
“I call on the international finance community to respond to these recommendations,” Mrs Abubakar said. “Our cookstove program now reaches and empowers millions of women, creating job opportunities, while reducing emissions. It has been essential for local economic development and to protect women and children from harmful smoke and burn risks at home, in school kitchens and other places. We are ready to absorb more finance in this field.”
In the transportation sector, the suggestion is for development finance institutions to use concessional loans and grants to incentivize diesel vehicle owners to transition to lower-soot or soot-free engines. Results-based finance instruments can be used to incentivize the adoption and continued maintenance of diesel abatement technology. In practice, funds could flow through designated national authorities to municipalities, private fleet owners, and other beneficiaries.
The report also identified four additional black carbon-rich sectors that offer strong potential for impact and action in the near to medium term. These include: Brick kiln efficiency and the adoption of alternative materials, replacing kerosene lanterns, adopting alternative of agricultural residues to avert burning, and reducing emissions from oil and gas flaring.
Over the longer term the report recommends cross-cutting strategies like including black carbon in development finance investment decision making. Such a step could see development banks offer sovereign borrowers more concessional loan terms if they choose to follow a low carbon pathway, or offer loans and grants to finance transformation of a particular sector.
Black carbon is a byproduct of burning diesel, coal, firewood, and crop residue and its negative impacts are both fast-acting and extensive. Black carbon particles absorb light and re-radiate it as heat in the atmosphere and act much more intensely than carbon dioxide albeit for a much shorter time. Recent studies show that black carbon may be responsible for close to 20% of the planet’s warming, making it the second highest contributor to climate change after carbon dioxide.
Black carbon is also a component of fine particulate matter (PM 2.5). Exposure to fine particulate pollution has a significant impact on human health. Indoor and outdoor air pollution causes close to 7 million premature deaths a year. Tens of millions more suffer from related, preventable diseases, including cardiovascular diseases, pneumonia, stroke, lung cancer, and chronic obstructive pulmonary disease.

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World Bank to Attract $100m Clean Technology Fund for Nigeria

The World Bank in collaboration with the Federal Ministry of Environment is working to attract a 100 million dollar clean technology fund to boost renewable energy in Nigeria. World Bank’s Lead Energy Specialist, Erik Fernstrom, said this in Abuja on Wednesday. Fernstrom said that the fund would be a concessional loan with low interest rate targeting a grid connected solar plant (PV) in some states in the country.
He said that the fund would specifically target a grid connected PV in some northern states where solar resources could be optimally used.
Fernstrom advised the Federal Government to invest in renewable energy in order to diversify its energy sources. He said that it was a problem for the country to depend on one source of energy.
“Nigeria depends solely on gas (petroleum); we do not want the country to rely on only one source of energy, if that source has problem, the country will suffer. “The issue is about diversification, diversify in energy resources that are affordable so that people can pay their bills.
“Solar is a very important complement and hydro is also a very important complement for Nigeria. Those sources need to be developed equally with gas,’’ he said. Fernstrom said that many African countries had, in the past, struggled to sustain investment in the energy sector. He said that diversification in the energy sector had helped to overcome this problem.
“Many governments have failed to manage, plan and finance the power sector efficiently as a result of lack of diversification of energy resources. “So in Nigeria, we rely on two energy resources – gas and hydro, majorly on gas. “You know very well that when you have some interruption, some gas pipeline sabotage or accident happen, you lose a lot of your power supply. “The same thing with hydro; if you have dry year, all of a sudden, you have no power from your hydro power.
“Part of what you have seen across Africa is that you need diversification and we need to find and draw on all the natural resources that Africa has so much of,’’ he said. Fernstrom expressed optimism that Nigeria could completely have renewable energy in the nearest future with the efforts of the Federal Government in reforming the power sector.
Source: Daily Times – http://www.dailytimes.com.ng/article/world-bank-attract-100m-clean-technology-fund-nigeria

MOBILISING PRIVATE FINANCING FOR
DEVELOPING THE SOLAR ENERGY POTENTIALS OF
NORTHERN NIGERIA FOR ELECTRICITY
GENERATION: A REVIEW
Ado Ahmed, ATB University, Bauchi Nigeria
A.Q. Ibrahim, Police Academy, Wudil, Nigeria
Sama'ila Idi Ningi, ATB Univerisyt, Bauchi

ABSTRACT]

Nigeria is hugely endowed with a variety of economic resources capable of launching its economy on to
the orbit of sustainable growth and development comparable to the standard of the industrialised nations
of the world. Though an energy deficient nation, Nigeria is blessed with various energy resources ranging
from fossil energy resources such as petroleum, natural gas, coal, lignite, tar sands and renewable energy
resources such as hydropower, solar radiation, wind, fuel wood, animal waste and crop residue that could
potentially and sufficiently support the energy quests for a fast growing 21st century economy. The paper
discusses the abundant solar energy potentials of Nigeria and demonstrates how it can be used to meet the
electricity generation needs of Nigeria. Central to the theme of the paper also is the discussion of the
mobilization strategies for attracting private financing for the solar electricity. The paper notes current
government policy on fuel mix diversification in the generation of electricity in Nigeria and the opening up
of the electricity sector for private financing of electricity generation infrastructure and concluded that the
abundant solar energy potential of the Northern Region can best be developed through mobilising private
financing.

INTRODUCTION
While Nigeria has abundant renewable energy potentials, the nation (despite its energy shortage) is yet to
tap its renewable energy resources to provide for its expanding electricity needs. Present energy quests in
Nigeria bring a lot of harmful environmental costs. According Akintola and Alamu(2010) significant
sources of energy consumption in Nigeria come from firewood and fossil fuels such as coal and oil which
inevitably lead to continuing deforestation, depletion of other energy resources and the emergence of
adverse environmental impacts. Therefore bringing renewable energy resources to augment energy supply
from fossil fuel energy resources will enhance energy availability with minimum environmental costs
(Ilenikhena and Ezemonye (2010).
In view of the quantum of funds needed for investment in the renewable energy sector and budgetary
constraint, governments are increasingly turning to the private sector for investment in renewable energy.
Additionally the reform of the Nigerian electricity supply industry and the avowed commitment of the
Federal Government of Nigeria to diversify the fuel mix of electricity generation by including the renewable
resources meant that the private investment will play greater role in the utilization of the renewable energy
particularly solar energy for electricity generation.
The private sector stands to contribute towards the development of renewable energy resources of the
country considering the increased demand for electricity supply, the widening supply deficit and the
willingness of Nigerians to pay for higher electricity supply (Adenikinju, 2005) and activities of
institutional investors in the Nigerian investment landscape, (with Pension Funding reaching almost 3
Trillion Naira for example), (Egwautu, 2014).
This study adds on the previous studies on renewable energy utilization for electricity supply in Nigeria in
many important ways. First the study like others, accepts the need for exploiting renewable energy
potentials of Nigeria as a way of reducing energy poverty in the country. It also accepts the need for private
sector investment as a catalyst towards enhancing the utilization of renewable energy potentials of Nigeria.
The paper goes a step forward by emphasising on the centrality of the private sector in the development of
solar energy potentials of Nigeria for electricity generation. The study directs its focus on the solar energy
potentials of Northern Nigeria, a region that currently contributes little to the generation pool in Nigeria
though the region houses the largest proportion of renewable energy potentials of the country.

LITERATURE REVIEW AND THEORETICAL FRAMEWORK.

Empirical Review
The campaign for renewable energy resources utilization is based on three considerations which include
the finite nature of fossil fuel energy resources as well as the greenhouse gases emission which many
scientists believe cause global warming (Nwoke et al, 2008). It is also based on the increasing costs of
providing energy especially electricity through conventional fossil fuel (Oluwole, et al 2012).
Generating electricity through solar radiation has been an attractive option for many countries because the
fuel is free, its use in the generation of electricity reduces operating costs and also reduces green house gas
emission by displacing fossil fuel use for electricity generation (Baker, 2013). Okoro and Madueme (2004)
conclude that on the whole, solar energy remains the most attractive and efficient way of electricity
generation in a developing economy like Nigeria where there is alarming over dependence on fossil fuel.
Solar energy can be used to generate power through solar thermal conversion and solar electric photo voltaic
conversion.
Investment in the low carbon sector has not been an attractive one for the private sector due to a number of
challenges. Which include regulatory uncertainty, distorted price signals, lack of commercially attractive
low carbon project, difficulty in assessing low carbon investment, inadequate access to finance, and
insufficient risk adjusted returns (Withana, et al, 2011). The high upfront costs of renewable projects and
the high interest rate (over 20%) charged in Nigeria also remain some of the significant investment
deterrents in private sector investment in the renewable sector of the Nigerian economy. (Newsom, 2012).
Additionally Wiser and Pickle, (1997) report that renewable projects face greater challenges accessing
financing.
Nigeria’s Electricity Industry Supply Industry.
The Nigerian electricity supply industry has failed to meet the electricity needs of Nigerians, generating
less than 4000 MW of electricity.. Figure 1 indicates the capacity utilization in the industry hovers around
an average of 40 % for the most parts of the period 1970-2004 which is indicative of the crisis in the
industry.
Consequently majority of Nigerians lack access to electricity and those served receive very irregular service
and are short of power for more than 60% of the time (World Bank, 2003; Okoro and Maueme 2004).
The Solar Energy Potentials of Nigeria: Nigeria is a tropical country and lies approximately between 4o
and 13o with landmass of 9.24 x 105 km2 enjoys an average daily sunshine of 6.25 hrs, ranging between
about 3.5 hrs at the coastal areas and 9.0 hrs at the far northern boundary. The sun is the most readily and
widely available renewable energy source that is capable of meeting the energy needs of the world without
polluting the environment. It can provide more power than any fossil fuel on the planet (Rochelle, 2010).
Imperatives of Solar Energy Utilization for Electricity Generation in Nigeria: The imperative for the
utilization of solar radiation in electricity generation has to do with the wide availability of the resource,
the need for the actualization of energy security, diversification of fuel mix, climate change mitigation and
sustainable development (Chendo ,2002; ECN, 2003; ; FGN, 2010; Hope, 2013).
Theoretical Framework on Private Sector Financing of Renewable Electricity: Many theories have been
forwarded by scholars to rationalise the inclusion of renewable energy such as solar, wind biomass, hydro
etc in the portfolio of energy resources utilized for electricity generation of a country. Some of the
theoretical issues discussed in the paper include Portfolio Theory (Awerbuch and Berger, 2003), the Peak
Oil Theory((Mediavilla, Miguel and Castro,2008) and the Economic Transaction Costs( Williamson, 1975,
1985; Fabrizio, 2012 )
How Private Sector Finances Renewable Electricity Project: Renewable energy projects are capital
intensive and require huge quantum of funds to execute. Generally renewable energy financing takes two
major forms: the on balance sheet and off balance sheet financing also referred to as project financing (DTI,
2000).
Imperatives of Solar Energy Utilization for Electricity Generation in Nigeria: The imperative for the
utilization of solar radiation in electricity generation has to do with the wide availability of the resource,
the need for the actualization of energy security, diversification of fuel mix, climate change mitigation and
sustainable development (Chendo ,2002; ECN, 2003; ; FGN, 2010; Hope, 2013).
Theoretical Framework on Private Sector Financing of Renewable Electricity: Many theories have been
forwarded by scholars to rationalise the inclusion of renewable energy such as solar, wind biomass, hydro
etc in the portfolio of energy resources utilized for electricity generation of a country. Some of the
theoretical issues discussed in the paper include Portfolio Theory (Awerbuch and Berger, 2003), the Peak
Oil Theory((Mediavilla, Miguel and Castro,2008) and the Economic Transaction Costs( Williamson, 1975,
1985; Fabrizio, 2012 )
How Private Sector Finances Renewable Electricity Project: Renewable energy projects are capital
intensive and require huge quantum of funds to execute. Generally renewable energy financing takes two
major forms: the on balance sheet and off balance sheet financing also referred to as project financing (DTI,
2000).
Strategic Options for Mobilizing Private Sector Investment in Solar Electricity Generation in Nigeria.
Some of the investment incentives used to promote investment in renewable energy includes: Renewable
Portfolio Standards (RPS). This mandates that electricity distributors must include a minimum of renewable
electricity in the total electricity they sell to the public. Renewable Feed in Tariff. This establishes
minimum prices for energy from renewable energy injected into the grid. It is also meant to give renewable
energy producers long-term contracts that guarantee access to the electricity grid at a constant price.
Subsidies and Investment credits. Subsidies are considered as very important incentives and are attractive
to investors for their simplicity. However they must be strictly monitored against abuse and to ensure that
project costs are not artificially inflated (Righter, 1996; Wiser et al., 1998; Wohlgemut, 2000)
Introduction of Carbon Price. This is meant to penalize fossil fuel generators for polluting the environment
(Bushnell, 2010; Drake, 2010; Aflaki and Netessine, 2011).
Facilitating Access to Finance. Renewable electricity generation projects are capital intensive projects that
require large upfront costs (beyond the financial capacity of the project promoters) and long construction
cost. Additionally the financial community consider such projects to be highly risky and unattractive
(Wiser, 1997). Renewable electricity projects therefore require preferential financial considerations in the
forms of concessionary financing terms such as lower interest rates, longer repayment period etc.
Structuring Power Purchase Agreement. Closely related to the above is the need for a workable power
purchase agreement (PPA). The PPA contract indicates how reliable and stable the long term revenue
stream of the project is. Since renewable projects are generally considered risky by financial institutions
(Delphi International, 1997), PPA contract could enhance the attractiveness of such projects within the
financial markets (Wohgemut, 2000).
Clean Technology Fund. As part of encouraging private sector investment for renewable electricity
generation especially solar and wind the Clean Technology Fund (CTF), part of the Climate Investment
Fund was introduced.

CONCLUSION AND RECOMMENDATIONS
We wish to recommend the following as important initiatives in addition to the existing programmes that
could help mobilize the private sector investment for solar electricity generation in Nigeria.Government
needs to evolve a robust policy aimed at mobilizing the private sector for investment in the abundant solar
energy potentials of northern Nigeria. To encourage private investment flow government needs to develop
a package of incentives and guarantees to encourage private investment and provide the necessary
guarantees needed to shore up the confidence of the investing community in the Nigerian electricity supply
industry. The need for regulatory credibility cannot be over emphasised. There is therefore the need for the
development of a robust regulatory structure that is transparent, credible and predictable. Regulatory
institutions must be independent and free from political interference.
Financing renewable energy is expensive requiring huge upfront cost which may not be easily met by the
project promoters. Such projects are also considered risky and unattractive by the financial market. There
is therefore the need for the government to sensitize the financial community about the benefits of solar
electricity projects for banks to key into the financing of such projects. Project bankability is surely based
on the off take arrangement and the Power Purchase Agreement. Government must effectively ensure that
a credible off take arrangement is structured with the distribution companies and a favourable PPA is
structured to enhance the attractiveness of investment in the abundant solar energy potentials of the country.