In a call that can at once significantly advance the course of global net-zero emissions targets, facilitate energy access and the development of African countries, Vice President Yemi Osinbajo has proposed a Debt-For-Climate (DFC) swap deal.

Explaining the concept yesterday at a lecture on a just and equitable energy transition for Africa at the Center for Global Development in Washington D.C, Prof Osinbajo stated that debt for climate swaps 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 programs.

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.”

Justifying the rationale behind such a deal in a statement by his media aide, Laolu Akande, the vice president submitted that the commitment to it would 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 (NDC),” he said, adding; that “To make this efficient, there are of course significant policy actions necessary to make this acceptable and sustainable.”

The vice president also proposed the greater participation of African countries in the global carbon market while exploring financing options for energy transition.

According to him, there is a need to take a comprehensive approach in working jointly towards common goals, including the market and environmental opportunities presented by the financing of clean energy assets in growing energy markets.

He said; “In addition to conventional capital flows both from public and private sources, it is also essential that Africa can participate more fully in the global carbon finance market.
“Currently, direct carbon pricing systems through carbon taxes have largely been concentrated in high and middle-income countries. However, carbon markets can play a significant role in catalyzing sustainable energy deployment by directing private capital into climate action, improving global energy security, providing diversified incentive structures, especially in developing countries, and providing an impetus for clean energy markets when the price economics looks less compelling – as is the case today.”

He encouraged developed countries to support Africa to develop into a global supplier of carbon credits, ranging from bio-diversity to energy-based credits, which would be a leap forward in aligning carbon pricing and related policy around achieving a just transition.
While also addressing the concerns of the African continent and other developing countries regarding a just transition, Prof Osinbajo noted that the central thinking for most developing countries is that we are confronted on this issue of a just transition with two, not one, existential crises; the climate crisis and extreme poverty.

“The clear implication of this reality is that our plans and commitments to carbon neutrality must include clear plans on energy access if we are to confront poverty. This includes access to energy for consumptive and productive use and spanning across electricity, heating, cooking, and other end-use sectors,” he said.

According to him, nearly 90 million people in Asia and Africa who had previously gained access to electricity can no longer afford to pay for their basic energy needs. The inflationary pressures caused by the COVID-19 pandemic and other macroeconomic trends have been further exacerbated by the ongoing war in Ukraine.

He added; “Countries worldwide have been hit by record prices on all forms of energy. Power prices are breaking records across the globe, especially in countries or markets where natural gas plays a key role in the energy mix.”
Prof Osinbajo however sounded a note of caution, saying that in such a global reality, limiting financing of gas projects for domestic use would pose a severe challenge to the pace of economic development, delivery of electricity access and clean cooking solutions, and the scale-up and integration of renewable energy into the energy mix.

Speaking on Nigeria’s initiative to combat the unfolding crisis, he revealed that the country’s Energy Transition Plan was designed to tackle the dual crises of energy poverty and climate change and deliver SDG-7 by 2030 and net-zero by 2060 while centering on the provision of energy for development, industrialization, and economic growth.

“We anchored the plan on key objectives including lifting 100 million people out of poverty in a decade, driving economic growth, bringing modern energy services to the full population and managing the expected long-term job losses in the oil sector due to global decarbonization,” he said

He also emphasised the role that natural gas must play in the short-medium term to facilitate the establishment of baseload energy capacity and address the nation’s clean cooking deficit in the form of LPG.
Furthermore, the vice president identified some double standards evident in the response to the current energy crisis by many countries in the global North.

According to him, today excluding South Africa, the remaining one billion people in Sub-Saharan Africa are serviced by an installed capacity of just 81 gigawatts. Sub-Saharan Africa has contributed, based on information that is already out there, less than one percent of cumulative CO.2 2 emissions.

“By comparison, the United States has an installed capacity of 1,200 gigawatts to power a population of 331 million people, while the United Kingdom has 76 gigawatts of installed capacity for its 67 million people. The per capita energy capacity in the United Kingdom is almost fifteen times than in Sub-Saharan Africa.”

“Many of these countries had barely a year ago seriously advocated or implemented policies on limiting public funding for fossil fuel projects in developing countries, making no distinction between upstream oil and coal exploration; and gas power plants for grid balancing.

“But today in the wake of the energy crisis, many European nations have made recent announcements to increase or extend their use of coal-fired power generation through 2023, and potentially beyond. This is in violation of their climate commitments and analysis suggests that this will raise power sector emissions of the EU by 4%, a significant amount given the high base denominator of EU emissions,” he said.

Prof Osinbajo then observed that Europe’s energy crisis has not been ignored, it continues to be met with support, and international resources. In stark contrast, the developing world is still being held to account for its emission reduction without adequate support and investment for its energy transitions.

Acknowledging the contrast to the wider responses to the climate crisis on the African continent, the vice president said, “We are not seeing careful consideration and acknowledgement of Africa’s aspirations. For instance, despite the tremendous energy gaps, global policies are increasingly constraining Africa’s energy technology choices.”

Nevertheless, he confirmed that with the Kigali communique and several other formal and informal consultations, African nations are now happily more intentional in taking joint ownership of our transition pathways and designing climate-sensitive strategies that address our growth objectives. This is what Nigeria has done with our Energy Transition Plan.

“Our Energy Transition Plan finds that an additional $10 billion over business as usual is required annually till 2060 to shift the entire economy to a net-zero pathway.”

On the subject of energy investments, he identified the mismatch in the volume of investments experienced in developed countries as opposed to developing countries.
According to him, while representing just 15% of the world’s population, high-income countries received 40% of global energy investment in 2018. Conversely, developing countries with 40% of the world’s population received just 15% of global energy investment. This hasn’t improved much in recent years.
Addressing what the ultimate goal of the global energy transition should be, Prof Osinbajo stated that it is in achieving reliable net-zero carbon energy systems to power prosperous, inclusive economies.

Speaking on the Nigerian context, he added that it means building sustainability into our economic planning, which we had developed in an Economic Sustainability Plan in the aftermath of the COVID-19 pandemic. This includes an ambitious plan over the near term to provide 5 million homes and SMEs with cleaner energy through its decentralized solar power program.

After he delivered remarks at the American think-tank, the vice president took questions around the theme of a just energy transition and the recently launched Nigerian Energy Transition Plan.

Members of the Energy Transition Implementation Working Group (ETWG) present at the lecture included the Minister of Works & Housing, Babatunde Raji Fashola; Minister of Finance, Budget and National Planning, Dr. (Mrs) Zainab Ahmed; Minister of Environment, Mohammed Abdullahi; Director-General and CEO of the National Council on Climate Change, Salisu Dahiru; Nigeria’s Ambassador to the United States of America, Dr. Uzoma Emenike, Special Representative of the UN Secretary-General for Sustainable Energy for All (SEforALL), Ms Damilola Ogunbiyi; Managing Director of Niger Delta Power Holding Company Limited, Chiedu Ugbo; and other senior government officials.

 

https://leadership.ng/osinbajo-advocates-debt-for-climate-swap-deal/

Even if Nigeria’s debt is swapped with climate change action, if we don't find ways to generate enough revenue to fund our national budget, we will end up heavily indebted once again.

Hmm

Nice one Mr vice president.

However we need a government that will transform our economy from consumption to production.

That is the only way to escape further debts in future when we produce over 70% of what we consume.

Vote Peter Obi for better naija.

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lol make dem swap am so that u can go back to the market doing 10k Tradermoni Giveaway

Very Smart chap


Although, if I were your creditor, omoh... I no go gree.


If you like, double your effort towards attacking the climate, Na still me and you go suffer am.

When I borrow you money, Na me and you follow chop am?

Story

All these agenda is just an excuse for the debtors not to pay his debt!

And then the debtors borrows again

vice president of Nigerian rejected like c Ronaldo

He would have been the best but God loves Tinubu more. His time will come

In 10 years, 100 million people have been airlifted out of poverty, the question now where did planes landed?

The president of Nigeria is nowhere to be found intellectually.

You get mind to load another problem in 2023.
Shameful.

Joy abounds in my heart knowing that this evil government has just about 7months to leave...Not again shall affliction and evil arise again. AMEN

The man that would have given Peter Obi a run for his money



Yor ubas goofed big time!

I have never seen Buhari deliver a lecture before like StarBoy Osinbajo and Peter Obi do effortlessly, does it mean that the man no sabi anything and Tinubu sold a poorly educated fellow to us because of his own emilokan ambition

Issokay

Haaaaaaa

With Nigeria's corruption profile, no creditor would agree to this proposal.

About half, if not more of our borrowing is stolen and laundered but we keep borrowing.

With Nigeria's unique position we should have been a creditor but here we are still borrowing up and down.

Pastor nobody will clear our debt let's deal with our internal problems first then will our IGR increase and we won't have to go borrowing everytime

The president that never was.

Lol.... His party members will use the funds to service their girlfriends, private army and excesses; only to borrow again for "ecological projects ".


Tueehh

smart one but will they agree?

Mouth making una never alleviate poverty to a reasonable degree

tiswell:
The man that would have given Peter Obi a run for his money



Yor ubas goofed big time!

the money bag politicians knocked him out, I wouldn't have voted for him if Obi is in the ballot but it would have been a win win situation for me between him and Obi

I empathise with Mr Vice President, really.

A case of 'use and dump', despite being very intelligent, by an old cargo retired soldier.

Unfortunately, he can't become President at least for the next 4 years, by which time he would be nearly 70, weakened and incapacitated by age. His time away from leadership would also have left him losing touch with key indicators by the time he may think of running in the future - like Bubu looking lost in Aso for 8 years because democratic leadership is different from the military one he ran as a 38 year old.

We were made to believe that Bubu quashed Matatsine in the 70s and would do the same with Boko. Unfortunately, we hoped on a lie - forgetting the key indices that were no longer the same over time as compared to the 70s & 80s. Now, Nigerians die in dozens and are kidnapped in large numbers daily with almost nothing being done. It is the most insecure time for us as a country, despite being led by a ex- military man with extensive local and international training (from several decades, which is now of little value, apparently).

Like Alex Ekwueme before him, PYO cannot aspire for any other role in government aside Presidency, and may thus be stuck forever, speaking and writing English, but being unable to effect the changes that he enthuses and knows - bar what he effected during his 4 months reign as Acting President.

May God bless him. I empathise with him, regardless.

Thieves, you borrowed and stole!

After stealing the borrowed money, you are mounting the pressure on Nigerians through tax and other forms of wicked economic policies just for Nigerians that never benefited from the borrowed money to pay through their nose.

Evil Government, evil party!

Has this guy not gotten the memo that the climate change agreement is discarded in practice.?
Europe has gone back to coal for energy. India and China don't want to hear anything about climate change.

Does he not realize that we need Fossil fuel to develop Nigeria?
Debt cancellation for fossil fuel ban is a poor deal.

Cheap energy is the bedrock of any prosperity of nations.

.

Star boy