PRESENTATION
Dr. Okoh, the CEO of CarbonFree Africa Network (https://carbonfreeafricanetwork.org), is a distinguished leader in energy and climate change research, boasting three decades of expertise in the field. Throughout his career, he has been instrumental in producing and disseminating high-level institutional technical reports, facilitating knowledge mobilization, and spearheading coalition and capacity-building efforts to advance climate change action in Nigeria, the broader region, and globally.
With an impressive portfolio comprising 5 books and 32 journal publications, Dr. Okoh has focused extensively on Africa's energy transition and climate change. His most recent publication, "Oil Mortality in Post-Fossil Fuel Era Nigeria, Beyond the Oil Age" (Springer, 2020), delves into the intricate challenges of transitioning Nigeria away from fossil fuel dependence while concurrently fostering economic growth through a low-carbon trajectory. This book has earned recognition as one of BookAuthority's Best Climate Change eBooks of All Time.
Dr. Okoh has graciously agreed to explore on behalf of LEAVIT initiative, the concept of leveraging international climate finance to incentivize and compensate oil-producing countries grappling with the resource curse. Encouraging them to transition away from oil reliance and embrace low-carbon alternatives for their economic development.
I-THE RESOURCE CURSE
LEAVIT: Is Oil “black gold” or the devil excrement ?
SADIQ OKOH: The perception of oil varies among individuals, communities, and nations, leading to contrasting views of it as the 'devil's excrement' or 'black gold.' The question arises whether this resource possesses the power to positively impact a state's socioeconomic development or becomes a curse. In some societies, oil is considered a blessing, bringing economic fortune and prosperity, while in others, it is seen as a curse causing socioeconomic challenges. Despite being labeled as 'black gold' when beneficial, oil also poses environmental issues and sparks conflicts. The complexity of oil lies in its dual nature, offering economic opportunities and environmental hazards, evoking diverse emotions in oil-producing and importing nations.
To secure economic prosperity, many oil-producing nations have heavily relied on fossil fuel extraction, anticipating relief from short-term economic challenges and improvements in living standards. However, this approach has led to significant economic and demographic growth in some instances, while causing societal divisions and marginalization in certain oil-producing countries. The "paradox of plenty" or "King Midas problem" emerges as a metaphorical challenge, where the abundance of crude oil fails to uplift overall living standards due to overproduction and overconsumption. Despite its historical role in industrialization, the impact of oil on a country's development remains complex and context-dependent. While some view oil as a catalyst for economic growth, others argue that nations heavily dependent on oil revenue face economic troubles, authoritarianism, and conflicts.
Terry Lyn Karl's research suggests that countries relying extensively on exports of natural resources experience slower growth, challenging the notion of fossil fuels as a universal driver of progress. Despite its historical transformative impact on economies, oil bears a dual nature with both positive and negative consequences. While it has played a crucial role in lifting millions out of poverty, particularly in societies embracing a 'Cornucopian' view, it has also been a source of turmoil in various regions. The South China Sea crisis exemplifies the contemporary struggle for control over oil resources, as seen in China's military actions aimed at capturing oil-rich territories. However, not all nations face a bleak outlook. Norway, the USA, Saudi Arabia, UAE, Canada, Indonesia, and Russia have successfully harnessed oil wealth for transformative purposes, elevating their living standards.
Despite these successes, the blame game persists, as oil extraction remains pollution-intensive, drawing criticism from environmentalists for its ecological footprint and contributions to atmospheric greenhouse gas imbalances. The assumption that turning away from fossil fuels would mean rejecting historical advancements is recognized, but the world faces an existential threat from the destructive impact of this neo-extractive mentality. To address this, bold steps are being taken globally to reduce the carbon intensity of the economy, necessitating a fundamental shift in business practices, values, and social norms. Key factors driving these transformations include rapid innovation, declining costs of clean energy technologies, falling oil prices, fossil fuel subsidy reform, climate risk awareness, and a decline in the carbon intensity of the global economy.
II-FOCUS ON NIGERIA:
LEAVIT: What has been the impact of oil on Nigerian Economy ?
SADIQ OKOH: The influence of the oil industry in Nigeria is profound, as it controls the nation's primary source of income. This control extends to the instruments of coercion, shaping laws governing oil operations and exacerbating distributional crises. Since the discovery of petroleum in 1956, Nigeria's economic trajectory has been marked by both prosperity and inequality, with the south-south region particularly affected. While oil has driven economic growth, it has also deepened societal divides and strained the environment through extraction and transportation activities. Despite periods of high oil prices, Nigeria has failed to convert windfall revenues into sustainable development, relying instead on unsustainable consumption patterns and heavy borrowing during downturns.
Nigeria has a history of well-conceived policies aimed at improving living standards, particularly in the agricultural sector before independence. Each region specialized in crops based on comparative advantage, fostering a robust export-oriented economy. However, with the advent of oil exports, focus shifted away from agriculture. Successive national development plans failed to prioritize agricultural development, leading to a decline in its contribution to GDP. Numerous policy initiatives were launched but lacked synergy and consistency due to political discontinuity.
LEAVIT: What has been the cost of Oil in Nigeria ?
SADIQ OKOH: Understanding the true environmental cost of oil, particularly in regions like Ogoniland, is imperative for guiding policy decisions and transitioning to alternative energy sources. Challenges in accurately assessing the environmental impact of oil activities persist, exacerbated by institutional bottlenecks and data deficits. Efforts to address pollution must consider the equity dimension, particularly regarding future generations and communities like Ogoniland, which have borne the brunt of environmental degradation. Questions regarding responsibility for environmental protection and the efficiency of markets in addressing pollution further complicate the analysis of oil's true cost. Ultimately, the cost of oil encompasses not only economic factors but also externalities such as GHG emissions and ecological debt, necessitating comprehensive assessment and policy action.
III-THE WAY FORWARD
LEAVIT: How could Nigeria get out of the carbon Catch 22 you present in your book?
SADIQ OKOH: The consumption and production of fossil fuels are crucial for Nigeria's National Determined Contributions (NDC) implementation and meeting government developmental goals. However, tensions between competing needs often undermine long-term decarbonization commitments. Despite serious attention to the NDC, near-term risks have diverted government policy towards economic and health-related priorities, impeding a low-carbon revolution or inclusive green growth. COVID-19 further complicated government goals for both people and the environment. To simultaneously reduce carbon intensity and meet development plans, market-pull policies and economic instruments like carbon pricing are essential. Increasing NDC ambition levels is crucial for decarbonization, and revenue spending must prioritize political feasibility and public acceptability.
Just Transition mechanisms, such as revenue recycling and Emissions Trading Systems (ETS), are proposed to ensure fairness and effectiveness. Resilience-enhancing actions and carbon emission reduction mechanisms, such as REDD+, should be integrated into development schemes. Nigeria's renewable energy drive requires policy support and international financing mechanisms like the Green Climate Fund to sustain low-carbon development.
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