Written Evidence on the UK’s Development Partnership with Nigeria

How Could UK Investment and Official Development Assistance be Best Catalysed to Support Nigeria’s Transition Away from Fossil Fuels and Respond to Environmental Challenges?

Dr Synda Obaji

Birmingham Law School

University of Birmingham

Introduction

I am an Assistant Professor in Energy Law at the University of Birmingham, and my research focusses on environmental justice, the legal dimensions of energy systems, sustainability and environmental governance issues. My engagement with this call for evidence is motivated by its critical relevance to energy and environmental policy, areas that are central to sustainable development.

Executive Summary

• Despite grappling with multifaceted development challenges, Nigeria’s shift towards a low-carbon economy is not just urgent, it is foundational to unlocking sustainable growth. Hydrogen has the potential to accelerate Nigeria’s transition away from fossil fuels.
• Nigeria’s substantial natural gas reserves offer a strategic pathway for producing blue hydrogen – an integral component of the country’s energy transition agenda. Equally, Nigeria is well-positioned to harness its abundant renewable resources, particularly solar and wind energy to develop green hydrogen at scale.
• The uptake of hydrogen as a substitute for natural gas offers a pathway towards cleaner, more sustainable energy. However, its widespread implementation faces significant hurdles, notably high system costs and limited investor interest.
• Prioritizing investment in hydrogen technologies will enhance the UK – Nigeria development partnership, unlocking shared opportunities for sustainable growth, energy innovation, and climate resilience, in line with the objectives of the 2024 Joint Communiqué on the Nigeria–United Kingdom Strategic Partnership.
• Nigeria’s recent wave of regulatory reforms has significantly improved the ease of doing business, strengthening investor confidence and positioning the economy as a more attractive destination for foreign capital.

Nigeria’s Energy Shift as a Catalyst for National Development

1. Nigeria’s economy and energy infrastructure are deeply intertwined with fossil fuels, particularly crude oil and natural gas. These resources account for the bulk of government revenue, foreign exchange earnings, and electricity generation. Accordingly, data from the International Energy Agency reveals that in 2022, natural gas was the dominant source of electricity generation in Nigeria, accounting for approximately 75% of total output.[1]

2. Nigeria’s reliance on fossil fuels presents a complex array of vulnerabilities that threaten both its economic stability and long-term development. First, the country’s fiscal health is tightly linked to global oil prices, making it highly susceptible to external shocks and market volatility. In addition, despite being a major energy producer, Nigeria faces persistent challenges in providing reliable electricity to its population – a paradox which highlights inefficiencies in both infrastructure and governance. Moreover, the environmental impacts of fossil fuel extraction have continued to undermine public health and ecological resilience, particularly in Niger Delta region of the country.

3. As global pressure mounts for a transition to cleaner energy, Nigeria stands at a critical juncture. Diversifying its energy mix and investing in renewables will not only mitigate these risks but also unlock inclusive growth and sustainable development. Hence, Nigeria’s energy transition is a catalyst for inclusive and sustained development, unlocking opportunities to alleviate poverty, enhance energy security, drive green industrialization, and strengthen climate resilience. By embracing a low-carbon future, the country lays the foundation for a more equitable, prosperous, and sustainable economy.

4. To achieve its 2060 net-zero target, Nigeria’s Energy Transition Plan identifies hydrogen as a critical component of its future energy mix.[2] Hydrogen’s potential to decarbonise energy-intensive industrial processes and the transport sector is well recognised.[3] This positions it as a strategic solution for decarbonizing key sectors such as power and transport which accounted for around 84% of Nigeria’s energy-related CO2 emissions in 2020 alone.[4]

5. Therefore, as a pragmatic short-term pathway to decarbonising these sectors, Nigeria can harness its abundant natural gas reserves to produce low-carbon hydrogen, supported by carbon capture and storage (CCS) technologies. Simultaneously, the country’s vast renewable energy potential, particularly in solar and wind, positions it to drive a transformative green hydrogen agenda. By integrating both approaches, Nigeria can accelerate its energy transition while laying the groundwork for long-term sustainability and global competitiveness in clean fuel production.

6. The high upfront cost associated with clean energy projects such as these, makes it necessary to mobilise international finance for Emerging Markets and Developing Economies (EMDE).[5] The International Energy Agency has aptly underscored the pivotal role of international finance in driving technological innovation and enabling a clean, affordable, and secure energy transition in emerging and developing economies thus:

To meet their energy needs, EMDE other than China need to access larger volumes of finance at more affordable rates, requiring targeted actions to reduce real and perceived risks. Capital also needs to be mobilised from the private sector, particularly international sources, as public and domestic financiers alone are unlikely to be able to meet future needs.[6]

7. In the light of the foregoing, to support Nigeria’s transition away from fossil fuels, it is imperative that UK investment and official development assistance is strategically directed towards the development of low-carbon and renewable hydrogen solutions. Such support can take multiple forms, including, targeted funding from government and industry for hydrogen production technologies, facilitation of trade and market access for hydrogen-based products, and robust backing for research, innovation, and capacity-building for hydrogen applications.

8. Additionally, given that the regulatory frameworks governing the production, distribution, and marketing of hydrogen remain in their early stages, there is a timely opportunity for a UK – Nigeria collaboration to shape robust legal and policy environments. By working together, both nations can co-develop regulatory regimes that reflect international best practices while being tailored to Nigeria’s unique energy landscape. Such a partnership would not only unlock investment opportunities but also ensure that the emerging hydrogen economy is built on a foundation of transparency, sustainability, and long-term resilience.

9. The Nigerian government is seeking to attract investment and catalyse sustainable growth in the hydrogen sector. Its commitment to fostering a more investor-friendly environment is evident in the recent wave of regulatory reforms which have markedly enhanced the ease of doing business. The Business Facilitation (Miscellaneous Provisions) Act, 2022, for instance was put in place to streamline bureaucratic processes, eliminate operational bottlenecks, and institutionalise reforms that promote transparency, efficiency, and competitiveness across key sectors. These reforms are particularly timely as Nigeria seeks to accelerate its energy transition and scale up hydrogen production. For the UK, this presents a unique opportunity to deepen its investment footprint in Nigeria’s clean energy sector, supporting infrastructure development, technology transfer, and policy innovation.

Recommendation

10. By aligning financial, legal and technical cooperation with Nigeria’s Energy Transition Plan, the UK can play a pivotal role in accelerating decarbonisation while fostering sustainable economic growth and energy resilience.

August 2025