Remember Kodak? It used to be a household name globally including in Nigeria. Kodak’s management failed to forecast the speed of the technological transformation of digital photography. The pioneers of photography and videography underestimated the potential of digital photography and hushed the inventor of the digital camera, Steven Sasson, an electrical engineer at Kodak. The management expected this disruptive technology to be a slow process and non-threatening to their business. To cut a long story short, Kodak filed for bankruptcy in January 2012.
History is repeating itself and this time this disruptive change will eradicate fossil fuels and allied industries. Today, more than half of the newly installed power generation is from renewables globally. The share of renewables in global electricity generation stood at 29 percent in 2020. Europe is leading the way and is set to become the first climate-neutral continent by 2050. Currently, the share of renewable energy in final energy consumption in the EU is around 20pc. Sweden leads with a 56.4pc share of Renewable Energy in its gross final consumption. The motivation behind this race towards Renewable Energy are the threats posed by climate change, the political economy of fossil fuels, and the increased profitability of the Renewable Energy project
Technological advancement has made the installation of Renewable Energy projects much cheaper and more cost-effective. The Levelized Cost of energy for solar PV has gone down from $359/MWh to $36/MWh, – a 90pc reduction, in the last 1 2 years making it the cheapest source of electricity. Wind power followed a similar pattern; it declined 72pc making it the second cheapest source. Renewable Energy sources, such as solar PV, wind, hydropower, biomass, and geothermal are providing electricity competitively cheaper compared to fossil fuel. Renewable Energy has become the most economical solution for growing electricity needs and provides a cheap alternative to developing countries that mainly rely on coal.
The share of transportation is one-fifth in global carbon dioxide emissions. At COP26 in Glasgow, 30 countries, including India, pledged to phase out fossil fuel-powered vehicles by 2040. These countries were joined by leading automakers such as Ford, Mercedes-Benz, General Motors and Volvo, and two dozen fleet operators, including Uber, in the transition towards zero-emission vehicles. The EU wants to phase out gasfuelled car sales by 2035. The US has already introduced the Zero-Emission Vehicles Act of 2020 requiring 50pc of all vehicles sold in 2025 to be zero-emission vehicles. This would be followed by a 5pc increase every year and ultimately all passenger vehicles sold in the US in 2035 would be zero-emission vehicles.
What will happen to countries that resist this change? For developing and oil-producing countries like Nigeria, the situation doesn’t seem to be pleasant. With an increased focus on clean energy to keep the global temperature under control, strict environmental rules and regulations will be enacted in the spirit of the Paris Agreement, COPs, and the SDGs. Trade policies, embargoes, and trade barriers will be created to promote green products and discourage all products made of or relying on ‘dirty fuel’. With the current pledges made by governments, it is estimated that 1 3 million new jobs in the renewable sector will be created in the next 1 0 years. The new employment opportunities in clean energy will have the potential to offset the decline in employment in fossil fuel industries, resulting in a change in the dynamics of the labour market.
Saudi Arabia has sensed this disruptive change that will come to its economy as a blow and opened itself up to embrace this transition. In an effort towards a green Saudi Arabia, the Kingdon in 2021 signed a multi-million dollar deal to purchase solar power plants as it embarks on a journey to produce 50pc of its electricity from renewables by 2030 compared to 1 pc today. Efforts are underway to shape and transform its tourism industry as a major source of generating profits. An estimated 10 billion trees are also to be planted in the coming decade to counter desertification, pollution, and health hazards.
The prospects of transition towards Renewable Energy seem to be bleak in Nigeria in the near future considering the strain on public expenditures during the pandemic, debt servicing, newly built refineries that will be difficult to retire, and hiking tax on Renewable Energy items to meet IMF conditions. Yet, Nigeria has a great potential in Renewable Energy generation and according to the World Bank, by utilizing just 0.071 pc of the land, Nigeria can fulfill its electricity demand through solar PV alone. However, the need of the hour is a firm stance and long-term policy commitment to make our fate different from what happened with Kodak.