PRELIMINARY NOTE BY AUTHOR:
The introduction of Austerity Measures by the Federal Government did not surprise me. On 30th January, 2008, I predicted the slackening demand for our oil, slowly at first, by 2012 and therafter, precipitously in a paper titled – Thinking Through Nigeria Oil Wealth Beyond 2012, presented under the auspices of Iju Public Affairs Forum. The paper is now Chapter 9 in Ladipo Adamolekun – Ideas for Development – Proceedings of Iju Public Affairs Forum Series, 2006 – 2009, Ibadan, Caligata Press, 2011, pp 38 – 170.
The initial paper was sent to many principal officers of Government, in the Presidency, Ministry of Finance and Budget Office. The introduction of the austerity measures shows that we did not take corrective measures. The paper, copy attached for your records said inter alia:
“in face of mounting evidence of the current massive progress in the technologies and production of alternative future fuels, fossil (petroleum) oil, might become unattractive to the market in the next decade. In that regard, all the developed and developing countries, major vehicle manufacturers, multilateral institutions, airlines, scientists and university groups, major oil companies and many other stakeholders are involved in the effort to develop alternative future fuels. The theme has, therefore, become everybody for himself, God for us all, the devil take the hindmost. Since Nigeria’s prosperity depends almost entirely on oil revenue, structures must be in place for the time when the demands for petroleum will slacken. That is beyond 2012″
It was George Wilhelm Friedrich Hegel 1770 – 1831 who said “The only thing man learns from history is that we learn nothing from history”
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9. Thinking through Nigeria’s Oil Wealth Beyond 2012
By O. O. O. Ogunkua
The central message in the well-researched presentation by O. O. O Ogunkua is the need for Nigeria to begin planning for the day when revenues from oil might no longer be realizable. He cited informed researchers and practitioners to demonstrate that while petroleum would still be available in huge volumes for decades after 2012, demand is very likely to begin to fall from around that date – gradually at first, but precipitously within a decade or two thereafter, because of the availability of alternatives to oil. The alternatives include synthetic fuel, hydrogen fuel, biofuels, solar energy and green energy. Warning that Nigeria’s oil wealth might become oil doom within less than a decade, he recommends some strategic plans that would help ensure independence from oil. The recommendations include the development of a Petroleum Displacement Provisioning and Compensation Mechanism that would help bring discipline to national development planning process; investing in the development of technology to support agricultural and industrial development; massive and effective investment in infrastructure; establishment of departments of Future Fuels in selected universities; and massive investment in human development.
The following information may contain or be deemed to contain forward looking statements. This is the goal and purpose of progressive policy science. I offer no apologies, even if time proved them wrong, so long as they prepare Nigeria for the worst scenario, in a world where with a little national effort, the future state could be much better.
o.o.o.ogunkua, 2008
Human progress is neither automatic nor inevitable. We are faced with the facts that tomorrow is today. We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history there is such a thing as being too late…We may cry out desperately for time to pause in her passage, but time is deaf to every plea and rushes on. Over the bleached bones and jumbled residues of numerous civilizations are written the pathetic words: Too late.
Martin Luther King Jr., Where do we go from here: Chaos or Community
The normative premise for prediction in an area as volatile as the international oil and energy environment squarely rests on preponderance of probability based on trends and available evidence. It is very risky business to put dates on future events. However, one is forced to take that gamble because of the tilt of available evidence and also to raise Nigeria from her complacency that petroleum wealth will last forever and revenue therefrom will continue to be sustainably high.
Planning as an instrument of national development has always been a very important but imprecise science involving subjective action patterns called decision making. Although we might be far from Praxeology[1], a Science of Action, in the management of national economies, the information technology age with inexhaustible data available on the world-wide-web and the highly combinatorial processing capability of computers have moved forward-looking nations from the conscription of minimal data management of the Disjointed Incrementalism[2] paradigm, which prescribes small correctible improvement on existing action patterns because of very limited control over the decision making environment, toward the optimizing post-Descartes’ Rational Comprehensive[3] paradigm which thrives in the analysis of all available data and information and admonishes the decision maker to explore all options to make the best decision.
Our normative premise, the Prognostic Policy Paradigm, therefore, although deals in Probability and Risk not certainties suggests that with the information technology tools now available to decision makers, national processes could be more precise. Planners and decision makers could take long term view of emerging scenarios and put in place pre-emptive actions patterns.
The paradigm relies on array of information technology tools to predict future events and prescribes insurance and precautionary measures to mitigate or obviate predicted outcomes. It recognizes the time-worn truism that social organizations seldom learn from their environment and when so disposed, they only do so, incrementally. That sometimes, it requires shock happenings or disaster waiting, for radical action patterns or corrective programs to be implemented. That in evaluating the national behavior the assumption that a nation is aware that danger lies around the corner could be presumptuous. What we are, therefore, dealing with in the Prognostic Policy Paradigm are Data and Evidence, Preponderance of Probability, Precautionary Measures and more importantly, Sensitization of affected population to the problem.
The Hypothesis is that, in face of mounting evidence of the current massive progress in the technologies and production of alternative future fuels, fossil (petroleum) oil, might become unattractive to the market in the next decade. In that regard, all the developed and developing countries, major vehicle manufacturers, multilateral institutions, airlines, scientists and university groups, major oil companies and many other stakeholders are involved in the effort to develop alternative future fuels. The theme has, therefore, become everybody for himself, God for us all, the devil take the hindmost. Since Nigeria’s prosperity depends almost entirely on oil revenue, structures must be in place for the time when the demands for petroleum will slacken. That is, beyond 2012.
Citing of Authorities
In whaling’s 1835-45 heydays, millions of homes used the clean, warm, and even light of sperm-oil lamps and candles. As sperm whale got scarcer, the fleet hunted more plentiful but less oil-rich species…but meanwhile, whale-based illumination’s price had stayed high enough to elicit two fatal coal based competitors…town gas and coal-oil kerosene…Ten years later, Michael Dietz’s clean, safe, smokeless, odorless kerosene lantern was imported and promptly entered cheap US production. In just three years…the whalers lost their customers before they ran out of whales…But also in 1859, Drake struck oil in Pennsylvania, making kerosene ubiquitous within a year, and by 1865, a third to a fourth the price of sperm or whale oil per unit of energy. Ultimately, town gas got replaced in turn by natural gas, gas and kerosene light, by Edison’s electric lamp….[4]
We are embarking on the beginning of the Last Days of the Age of Oil. Nations of the World that are striving to modernize will make choices different from the ones we have made. They will have to. And even today’s industrial powers will shift energy use patterns….The market share for carbon-rich fuel will diminish, as the demands for other forms of energy grows. And energy companies have a choice to make: to embrace the future and recognize the growing demand for a wide array of fuels; or ignore the reality, and slowly – but surely be left behind… Mike Bowlin, Chairman and CEO, ARCO and Chairman, American Petroleum Institute, 9th February, 1999.
My personal opinion is that we are at the peak of the oil age and at the same time the beginning of the hydrogen age. Anything else is an interim solution in my view. The transition will be very messy, and will take diverse competing technology paths, but the long-term future will be in hydrogen and fuel cells. Herman Kuippers, Business Team Manager, Innovation and Research, Shell Global Solutions, Nov 21, 2000.
The days of the traditional oil company are numbered, in part because of emerging technologies such as fuel cells….Peter I. Bijur, Chairman and CEO, Texaco Inc. late 1990’s
Market forces, greenery, and innovation are shaping the future of our industry and propelling us inexorably towards hydrogen energy. Those who don’t pursue it …will rue it. Frank Ingriselli, President Texaco Technology Ventures, 23 April, 2001.
We’ll evolve from a world of hydrocarbon dependency to a mixture of hydrocarbon and alternative energy use. Vast quantities of liquid hydrocarbons (oil and gas) will be left behind in the ground, just as solid hydrocarbons (coal) are left behind today. Chris Gibson-Smith, Managing Director, BP, 25 September, 1998.
Thirty years from now there will be a huge amount of oil- and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because of lack of stones, and the Oil Age will come to an end not because of lack of oil… [Fuel cell technology] is coming before the end of the decade and will cut gasoline consumption by almost 100 per cent…On the supply side it is easy to find oil and produce it, and on the demand side there are so many technologies, especially when it comes to automobiles. Sheik Zaki Yamani, Oil Minister of Saudi Arabia (1962-86), June 2000.
So why is Sheik Yamani predicting the end of the Oil Age? Because he believes that something fundamental has shifted since… [1973]—and sadly, for countries like Saudi Arabia, he is quite right. Finally, advances in technology are beginning to offer a way for economies…to diversify their supplies of energy and reduce their demand for petroleum, thus loosening the grip of oil and the countries that produce it…The only long-term solution…is to reduce the world’s reliance on oil. Achieving this once seemed pie-in-the-sky. No longer. Hydrogen fuel cells are at last becoming a viable alternative….One day, these new energy technologies will toss the OPEC cartel into the dustbin of history. It cannot happen soon enough. The End of the Oil Age, editorial, The Economist, 25th October, 2003.
(Sources of above citations – Amory B. Lovins – Winning the Oil Endgame, Earthscan, and UK.2004).
The dream of using hydrogen, the most plentiful element in the universe, as green fuel to cut climate change moves a step closer today (12th November, 2007) with the announcement that it can be made with the help of bacteria… Public transport systems worldwide are moving toward hydrogen-powered engines as an alternative to petrol engines, because they burn hydrogen to produce only water… Dr. Shaoan Cheng and Prof Bruce Logan of Penn State University, Pennsylvania, devised a method of hydrogen production that relies on combining electron-generating bacteria and a small electrical charge in a “microbial electrolysis cell” to belch out hydrogen gas. Roger Highfield, Science Editor, Daily Telegraph, January 19, 2008, Hydrogen fuel comes a step closer.
The Technology Gambit – Future Fuels
For Chess Players, The Queens Gambit is a maneuver in which the King is checkmated in a few moves and the game is lost, if the correct response is not initiated. The era of future fuels technology gambit has begun. These authorities were embolden to make authoritative claims because of their familiarity with the convergence and streams of patent future fuels capable of replacing petroleum as the energy of choice for the combustion engine and other energy dependent platforms.
Convergence and Streams of Technologies
The alternative energy stocks worthy of consideration are in two categories.
Potential Future Fuels
Those are energy sources whose early potentials seem compromised because of problems of sustenance and technicalities or technologies still being tested and perfected. However, improvement in technology or a breakthrough can change the status of a potential future fuel to a patent future fuel.
Nuclear power is generated using Uranium and today supplies around 7% of the world’s energy needs. The initial euphoria which in 1956 followed the opening of the first large-scale nuclear power station at Cambria, England and led to the building of other plants around the world and its use in other applications like military ships and submarines has reduced because of the complexity of planning and building reactors on time within budget; the cost of providing electricity throughout the 40 to 60years of plant-life since nuclear stations cannot just be turned off, like a conventional power station and the substantial cost of decommissioning and waste disposal. Nuclear power is also not easily adaptable for use in motor vehicles and person-friendly contraptions because of the danger of radiation fallout. Nuclear power stations will continue to be built, like the Areva’s EPR Generation III+ Nuclear plant in Olkiluoto, Finland[5] and the Westinghouse’s AP1000 version for which China is already committed to 5 plants targeting 20 plants in 2020[6], but it poses no immediate threat to petroleum.
Solar Energy is energy from sunlight converted into electricity. The sun although 150 million kilometers from the earth makes available 38850 zettajoule 10 21 per annum of energy (1 kilowatt-hour is equal to 3.6x 10 6 megajoule) to the world annually. However, the technical difficulty of harnessing, principally with solar panels, and delivering adequate electricity to high energy demand areas and contraptions, cumbersome off-sunshine storage, non-year round availability and low intensity of availability in some parts of the world has limited its use. Currently, 0.04% of world energy need is from solar power. Solar power is no immediate threat to petroleum.
Wave Power is the capture and conversion of the energy of the ocean surface to usable energy including electricity. Wave power generation is not a widely used technology. Some installations are three750 kW devices at the Aguçadora , Portugal; a 3mW array of four 750 kW at Orkneys, Northern Scotland; the 20mW Wave-hub in Cornwall, England and in Northern California, USA, where itserves an estate of 1500 homes. The use of wave power is negligible and therefore poses no threat to petroleum.
Wind Power is conversion of wind to useful form using wind turbines. At the end of 2009, world-wide capacity was 159.2gigawatts. Wind currently provides 1% of world wide electricity need. There are plans for more fields such as the 36 turbines at Braes of Doune, the 15 turbines at Earlsbum and 8 turbine farms at Craigengelt, Carron Valley all in Scotland. It provides sizeable portion of the need of some countries – 20% for Denmark; 14% for Ireland and Portugal, 11% for Spain and 8% for Germany. Wind power does not currently pose a threat to petroleum.
Geothermal power is energy generated by heat stored beneath the earth surface. It supplies less than 1% of the world energy but is important for a place like Iceland where the Krafia geothermal station supplies 26% of the energy need. Since the first geothermal station was built in Larderello, Italy, in 1904, other stations have been built in Africa, Australia, Iceland, New Zealand, Portugal, Philippines, UK and USA. The largest group of geothermal plants is at the Geysers, California. Geothermal power does not pose immediate threat to petroleum.
Patent Future Fuels
The group of renewable future fuels yielding products at levels indicating that they would play a major role in the displacement of petroleum in the next two decades. While each gallon of gasoline burnt everyday “took eons to form, very inefficiently, from a quarter of a million pounds of primeval plants”[7], sources of renewable fuels are sometimes recharged many times within a year.
Synthetic Fuel – very promising alternative to petroleum. The first generation is converted bioethanol (e.g. Fatty Acid Methyl Esters, FAME). The second generation involve coal to liquid process to produce synthetic fuel and recently, biomass to liquid to produce synthetic fuel and synthetic diesel (BTL- Gasification Fischer Tropsch Technology). The fuels are sometimes as clear as water because of the near absence of aromatics and sulphur with excellent quality and compatible with existing engines and infrastructure. The First commercial BTL facilities patented carbo-v process by CHOREN in partnership with Daimler Benz, Volkswagen and Shell are located in Germany, China and USA. The US military had used the product of another company, SYNTROLEUM, based on the same technology for the first successful test flight of B-52 bomber on 19th September, 2006. (Engines 8 & 9 ran on a 50-50 blend of JP8 and syntroleum S-8) and Washington DC buses run on syntroleum fuel. As at July 2009, worldwide commercial synthetic fuels production capacity is over 240,000 barrels per day (38,000 m3/d), with numerous new projects in construction or development.
Hydrogen Fuel – It has been touted as the energy of the future into which the world will transit. Herman Kruippers[8] has posited that anything else is an interim solution. This is not without reason. Hydrogen (H2) is the most abundant of chemical elements, roughly 75% of the universe’s elemental mass, available all around us in water, in greenery and in the whole landscape and space. It is represented by the symbol H and atomic number of 1. At standard temperature and pressure it is a colorless, odorless, nonmetallic, tasteless, highly flammable diatomic gas with a molecular formula H2. It is a green fuel which can put a stop to climate change.
The imminent Hydrogen economy moved a step closer on 12th November 2007 with the announcement by Dr. Shaoan Cheng and Professor Bruce Logan, two scientists from Penn State University (PSU), USA, of a breakthrough of its manufacture with bacteria at almost 99% efficiency. This is not to underestimate the technical and scientific difficulties still remaining which are well documented in: The Hype About Hydrogen: Fact and Fiction in the Race to Save the Climate by Joseph J. Romm, 2004. They include generation cost, greenhouse gases generated during production with current technology by burning fossil fuel, (which should be resolved with the breakthrough from by the PSU team; the low energy content per volume, weight of the container, the cost of the fuel cells and the infrastructure. However, the fact that vehicle companies already have concept cars being tested and the outstanding breakthrough by the PSU team mean that the days of regarding the start of the hydrogen age as a dream might be at end.
Hydrogen as an energy source constitutes one of the most viable threats to fossil fuel and if successfully harnessed will be one of the greatest scientific advancement of the 21st Century.
Biofuels – The most potent current threat to petroleum is bio-fuel. The simplicity of the basic scientific production process, incredible efficiency of new production technologies, the commonplaceness and universal availability of the production feedstock, the metastasis of production plants, the usability of existing storage, transportation and retailing outlet facilities with very minimal modification, has made biofuels the fuel of the now and the future. A current and future threat to petroleum and consequently, a threat to the future revenue profiles of Nigeria. The reality of the displacement will begin to magnify significantly from 2012. Biofuels are already being used globally and production facilities are expanding in Europe, Asia, Africa, and the Americas. Many different plants and plant-derived materials are used for bio-fuel manufacture.
Simple Basic Production Process:
Ethanol: Starchy mashed grain is mixed with water. Enzymes convert the starches into simple sugar called dextrose. Yeast is added and fermentation begins. After 40 to 50 hours, byproducts are filtered out and ethanol is distilled. This technology is common place in Nigeria in the production of ogogoro (local gin).
Biodiesel: oil is pressed from plants like soybeans and rapeseed yielding the fat called triglycerides which are purified by heating, methanol or a catalyst, such as, potassium hydroxide are added which breaks triglycerides into glycerol and esters (biodiesel).
With the advancement in technologies and processes, biofuels are now in the fourth generation. The characteristics of the fuels have improved their universal use and the base of the production feedstock has expanded to include almost any biomass:-
First Generation – vegetable oil; biodiesel, bioalcoholics, biogas and solid biofuel Second Generation – biohydrogen, bioDME (Dimethyleter), Biomethanol, DMF, NTUdiesel, Fischer-Tropsch diesel and mixed alcohol (Mixture of ethanol, propanol, butanol with some hexanol, heptanol and octanol) Third Generation – oilgae or algae fuel. The United States estimates that it would require 15,000 square miles (34,839 Square Kilometer) of algae farm to replace all the petroleum fuel being used in the USA. Notwithstanding taxonomic difficulties[9], the Fourth Generation has arrived – pyrolysis, gasification, upgrading of solar to fuel and genetic manipulation of organisms to secrete hydrocarbons. For instance, Greenfuel Technologies Corporation, USA, has developed a patented bioreactor that uses non-toxic photosynthetic algae to take in smokestacks flue gases and produce biofuels such as biodiesel, biogas and a dry fuel comparable to coal. Also with thermal depolymerisation of biological wastes one can extract methane and other oils similar to petroleum.[10]
Table I – Common crops average yield
Crop
Kg oil/ha
litres oil/ha
lbs oil/acre
US gal/acre
corn (maize)
145
172
129
18
cashew nut
148
176
132
19
cotton
273
325
244
35
hemp
305
363
272
39
soybean
375
446
335
48
coffee
386
459
345
49
sesame
585
696
522
74
rice
696
828
622
88
sunflowers
800
952
714
102
cocoa (cacao)
863
1,026
771
110
peanuts
890
1,059
795
113
rapeseed (Canola)
1,000
1,190
893
127
olives
1,019
1,212
910
129
jatropha
1,590
1,892
1,420
202
macadamia nuts
1,887
2,246
1,685
240
avocado
2,217
2,638
1,980
282
coconut
2,260
2,689
2,018
287
oil palm
5,000
5,950
4,465
635
Algae (actual yield)*
6,894
7,660
6,151
819
(theoretical yield)**
39,916
47,500
35,613
5,000
Source: Wikipedia, The Free Encyclopedia
The Possibility of Displacement of Fossil Fuel
The world proven reserve of crude oil in 2009 was about 1,240 billion barrels. OPEC share was 922.4 billion barrels or 77.2 %. Nigeria’s share was 36.2 billion barrels or 3.02% of world proven reserve or 3.92% of OPEC share. However, the total world crude oil export, part of which gives Nigeria its revenue, was 42.32 billion barrels. OPEC’s share was 23.3 billion or 53.6%, while Nigeria’s share was 2.24 billion or 5.718% of world total or 9.163% of OPEC’s share. When the production of some of the consuming nations is taken into consideration, OPEC contribution to world oil consumption was about 44.5%. Nigeria’s contribution constitutes only 3% of the world consumption or 6.9% of OPEC’s share.
Table II – The World Energy Matrix
Energy Stock
%
Natural Gas
21
Oil and Oil Products
36
Coal
23
Uranium
7
Hydraulic and Electricity
2
Biomass
22
Source: Constructed from Kuniyuki Terabe – Brazil: A successful Story, Future Fuels Conference, Washington D.C, USA, Nov 27-29, 2006.
Table III – The Road fuel global production 2005
Fuel
Production (billion litres per year)
Crude Oil
4,705
Gasoline (Road Sector)
1,289
Diesel (Road Sector)
668
Bioethanol( 1.7% energy basis)
33
Biodiesel (0.5% energy Basis)
4
Source: Constructed from Kuniyuki Terabe – Brazil: A successful Story, Future Fuels Conference, Washington D.C, USA, Nov 27-29, 2006.
The most common use for bio-fuels is automotive transport. The modifications necessary in motor vehicles for use of different ethanol-mix fuels are as in TABLE IV below[11].
North America
USA – The USA is the largest producer, consumer and importer of petroleum products. The prognosis that 30% of USA’s energy can be displaced by alternative energy by 2030 is real. Advances in the development of alternative fuels have been quite impressive. Ethanol production rose by over 40% from 4 billion in 2005 (or 3% of the 140 billion gallons of USA fuel requirement) to 6.5 billion gallons in 2007 and with additional 86 plants added capacity to existing 100 plants in 22 States, production by 2009 was 10.75billion gallons against a demand of 10.9billion gallons.
Production cost was USD2.26 per gallon in 2005 against targeted price of USD1.10 per gallon by 2012. Out of the 170,000 fuel stations in the USA, by 2009 700 offer E85 fuel (fuel 85% biofuel mix with petrol). New products specifications have also pushed up the production of biodiesel from 165 plants in 20 States in 2006 from 245 million to equal current USA demand at 400 million gallons.
The Fuel Renewable Standard Program authorized by the Energy Act of 2005 requires 7.5 billion gallons of gasoline blend for vehicles by 2012 and a 20% reduction in gasoline use within ten years. The Bush Administration Alternate Fuel Standard established a minimum use of 35 billion gallons of renewable and alternative energy by 2017 (25% of USA energy need). The bad news for Nigeria is that USA was already producing 22 billion gallons of biofuels in 2007. By 2009, ethanol production alone has climbed from 1.770 billion barrels in 2001 to 10.75 billion barrels cutting imports to only 190 million barrels. It has been estimated that if about 34,000 square kilometers, the size of Maryland, USA or Benue State, Nigeria, is dedicated to biofuel feedstock, the USA would wean itself from fossil fuel imports.
The Obama Administration has put full throttle on the alternative energy programme initiative[12]
• A $3.4 billion Smart Grid Investment Grant from the American Recovery and Reinvestment Act of 2009 affecting 49 states to reduce electricity use by over 4% by 2030.
• Advanced Research Projects Agency-Energy projects under the Department of Energy and in collaboration with the Department of Defense, modeled after the Defense Advanced Research Projects Agency.
• A new initiative to create a “self-sustaining home energy efficiency retrofit industry”.
• New efficiency standards for home appliances.
• A new National Fuel Efficiency Policy for car model 2012-2016 and targeted average fuel efficiency of 35.5 mpg by 2016
• Four different measures to increase the production of biofuels: a renewable fuels standard, biomass crop assistance program, a biofuels working group and an interagency task force to create a federal strategy for carbon capture and storage.
• A new Environmental Protection Agency ruling (Mandatory Reporting of Greenhouse Gases Rule) requiring the reporting of greenhouse gas emissions by major emitters in the United States.
Over $70 billion in tax credits and direct spending for programs involving clean energy and transportation.
Provision of over $80 billion in clean energy investments including
• $11 billion for a smart grid to connect rural energy-producing sites with cities, and smarter use of energy within homes,
• $5 billion to weatherize low-income homes,
• $4.5 billion to reduce the federal government’s own energy bill by making federal buildings more energy efficient,
• $6.3 billion to support state and local energy efforts,
• $600 million to train people for green jobs, and
• $2 billion to promote investment in battery storage technologies.
• Extension of the investment tax credit for solar energy.
• Extension of the production tax credit for wind energy.
• Allowing utilities to participate in income tax credits.
Declared October as the National Energy Awareness month.
The flurry of activities during the October 2010 National Energy Awareness month showed the kind of commitment for results that had characterised watershed points in the American national processes with an array of direct aid funding to big and small businesses, private individuals, inventors and of course, States, Cities and Universities have cut the bug. For instance, on October 3, 2010, Long Beach, California, celebrated her sustainable City Action Plan, a platform for alternative energy which includes powering a substantial part of heavy equipment at its mammoth port with alternative energy by 2020.[13] Also the Presidential Leadership Academy and Centre for Democratic Deliberations on October 19, 2010 sponsored the Second Annual Oxford Debate in Penn State University on the Theme: Pros and Cons of Nuclear Energy.[14]
In October 2007, there was furore in Nigeria on the establishment and location of the United States African High Command. In our judgment, the African High Command serves dual purposes for the USA to secure intervention platform in the Gulf of Guinea, if and when necessary, but more importantly, a ploy to lull Nigeria and other countries into a false sense of complacency that the USA and her allies cannot do without petroleum, while aggressively developing alternatives.
European Union adopted in 2003, the policy of having 5.7% of the total transport fuel consumption from biofuels by 2010 and up to 20% by 2020. The actual progress on ground has been more dramatic. It has been estimated that if 20% of the total crop land of Europe is dedicated to biofuel feed stock and 40% by 2020, the EU countries will meet their energy requirements. Global biodiesel production was 4million tonnes in 2006 but crossed the 20million tonnes mark in 2010. Approximately 85% of production is from the European Union. All the members of EU are aggressively pursuing alternative fuel plans with total commitment and impressive results.
Asia
China – E10 blends is mandatory in five provinces that account for 16% of the nation’s passenger cars. Thailand has an ambitious 10% ethanol mix in gasoline starting in 2007. In Malaysia and Indonesia, the palm oil industry supplies an increasing portion of national diesel fuel requirements.In India, a bioethanol program calls for E5 blends throughout most of the country by 2010 and then raising the requirement to E10 and then E20.
South America
Brazil is the most seducing success story in bio-fuel production. Ethanol production from the Proálcool ethanol sugar program had risen to 24.9 million litres or 6.5billion or 37.7% of world production in 2009. 25% of her domestic energy use is bio-fuel. Brazil is building on current success by expanding production of biodiesel with a blend of 2% biodiesel by 2008, increasing to 5% by 2013. She is constructing between 2007 -11 a 25 billion Brazil reals (US$13.1billion) 89 sugar ethanol mills.
.
Table V – Brazil Energy Matrix
Energy Stock
%
Natural Gas
8
Oil and Oil Products
39
Coal
7
Uranium
2
Hydraulic and Electricity
15
Biomass
29
Source: Constructed from Kuniyuki Terabe – Brazil: A successful Story, Future Fuels Conference, Washington D.C, USA, Nov 27-29, 2006.
Colombia enforces the use of 10% ethanol in all gasoline sold in cities with populations exceeding 500,000. In Venezuela, the State Oil company is constructing 15 sugar cane distilleries as the introduction of E10 (10% ethanol) takes effect.
Drivers for Accelerated Production of Biofuels
The drivers of the displacement are:
Rising prices of fossil fuel at USD120 per barrel in May 2008, considered improbable for many years.
Regenerated agricultural sector in developed oil consuming nations tied to alternative fuels development.
Increasing concern over the security of supply considered as threat to national security.
Increasing perfection and economics of the technologies of alternative fuels with quality comparable to petroleum dramatically increasing feedstock range and yield, which in turn drives down the price per barrel’
Increasing concern over the environment focusing individual nations’ actions and international collective effort on the reduction of greenhouse gases emission. This, in the main, means substitution of fossil fuel with more environment friendly alternative fuel.
Efforts at modification and increase efficiency of the combustion engine platform for future fuels use – combining hybrid-electric propulsion, lightweight wheels, carbon composite crash absorbing parts at half current vehicle weights.
Tax Incentives, legislations and other Government support.
Disaster associated with production as in the recent Gulf Oil spill in the USA leaking an average of 53,000 barrels per day from April 20 before successful capping on July 15, 2010.
The Nigeria National Paper Economy: Business as Usual Paradigm
The price of oil steadily rose from a paltry USD29.29 in1999 to a hitherto unbelievable USD122 in May, 2008. Nigeria earned estimated revenue of N25, 873.4 billion between 1997 and 2006. Out of that amount, the contribution from oil was N21, 474 billion or 83%. The average annual contribution over the ten year period was N2, 147.4 billion or 79.3%. The year to year contributions ranged from a lowest of N324.3 billion out of N463.6 billion or 70% in 1998 to a highest of 88.8% out of N5, 965.1 billion in 2006.[15]
The huge resources notwithstanding an estimated 126 million out of the country 140 million people live on less than N220.00 or USD1.25 per day. In 2010, Nigeria is 159th out of 177 countries in Human Development Index. The enormous oil wealth has not impacted positively on the citizens` wellbeing.
The National Economic Empowerment and Development Strategies 2004 – 2007, the development blueprint to “improve the quality of life of Nigerians significantly, create social safety nets for the vulnerable segments of the populace, and cater for those displaced by the dynamics of the reform process…” did not deliver.[16] The Review commissioned by the Nigerian Government showed slow progress in key areas of the Millennium Development Goals of poverty eradication. There is no significant improvement in primary school completion, child mortality and maternal health; and the number of the citizens without access to basic sanitation is increasing. The phony national growth was the emergence of a National Paper economy, where banks declared staggering profits running into billions, while value added in the real sector declined steadily.
The successor, Development Strategy, Vision 20-20-20-20 is a “development plan of deceit” when subjected to normative and empirical analysis. The targets can be dismissed by the fact that the annual Nigeria’s GDP growth put at a current questionable figure of 7% per annum will need to improve to 15% annually from 2010 – 2020. No nation in modern times has achieved that feat. The annual growth achieved by China over a decade considered an economic miracle is 10%. Nigeria is not in a position, in view of current realities, to achieve a credible 7% not to talk of 15% growth in GDP per annum. A sustainable 15% growth over a decade is, therefore, a mirage and a vision of deceit.
2012 and Beyond
The most important agenda for the international community in the 21st Century is saving the earth now completely degraded by the carbon emissions and painfully, not poverty, disease, hunger or wars. In 2012 the world will engage in the next comprehensive assessment of the collective effort to save the environment when the current Kyoto Protocol expires. An important plank in the effort is the individual and collective action plans of many nations to replace petroleum with alternative fuels since the combustion of petroleum is the greatest contributor to CO2 emission. That explains why the USA and other countries are dovetailing their strategic planning for alternative fuels production into the 2012 Agenda. The goal of the Kyoto Protocol is to reduce emission from green house gases (carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons and perfluorocarbons) by 5.2% by the Annex 1(developed) countries by 2012, that is, 29% cut by 2010 if the Protocol never existed. That, in the main, means substitution of petroleum with more environment friendly alternative fuel.
Since it is clear that the solution to the problem for which the agenda of national and international cooperation have converged means changing radically the architecture of fuel energy away from petroleum and the high probability that the goal will be achieved, Nigeria is asking the wrong question with respect to funding her development process. The basic question underpinning the process of Nigeria’s development should be “what happens when revenue from oil dries up?”
The battle against dangerous climate change is now considered as fight for humanity. Winning will require far-reaching changes at many levels but in consumption, it boils down to how we produce and price energy, and in international cooperation.[17] Because:
Global warming is evidence that the earth atmosphere is being overloaded by carbon emissions.
.With 30C warming, 20 -30% of land species could face extinction.
Current concentration of greenhouse gases at 380ppm (parts per million) could rise in the course of the 21st Century to 750ppm and commit the world climate change to 5OC far above the 20C safe threshold.
With the average annual absorption capacity at about 10GtCO2e (Global tonne of carbon dioxide equivalent), the current emissions at around 48Gt CO2e is overloading the earth’s carrying capacity by a factor of between 10 and 50.
The carbon budget[18] for the 21st Century could expire as early as 2032.
The theme for United Nations Development Programme 2007/8 Human Development Report is “Fighting Climate Change: Human Solidarity in a Divided World.” Since the atmosphere cannot be segmented the survival of the world is a common cause with the realization that civilization is in jeopardy. Oblivious third world countries, like Nigeria, will benefit, as an externality, if the earth survives, even without taking any action. However, Nigeria must take strategic actions to use her oil wealth to diversify away from a mono-crop economy and transform to an industrial and technological power.
Conclusions and Recommendation
The survival of the Nigerian civilization is linked up with her ability to free herself from the oil wealth, which might become her oil doom. In the past, it was believed that Nigeria has a leeway of about four decades to achieve that goal. The case is no longer so. The time to put in place strategic action plans and pursue the goal of independence from the stranglehold of oil wealth within 10 years is now, the future may be too late.
The following recommendations may be the starting point:
Changing Budgeting and Public Expenditure Management Behavior :
(i) Simple but difficult behavioral change of asking what happens when the oil revenue runs out will radically change the architecture, character and the focus of the budget and public expenditure management and guide spending into productive focus.
(ii) Instituting a Discounting Mechanism for petroleum as a wasting asset in Public Expenditure Management Process to factor-in a Petroleum Displacement Provisioning and Compensation Mechanism (and develop an indexing system) attached to projects and expenditures in the budget of all Ministries, Departments and Agencies (MDAs). The goal is to compensate or provision for loss of national non-renewable asset as a result of expending funds generated from oil. This is a discounting and saving for oil mechanism.
(iii) The oil loss provisioning and compensation mechanism will keep the wasting character of oil in constant public focus and hopefully reduce some of Nigeria’s licentiousness, bring discipline into the planning and development process and also have salutary effect on private sector development.
Planning and Development Process Directed to Agriculture
(iv) Nigeria’s development process should be redefined in favor of agriculture where she has comparative advantage. This will put more people to work with appreciating income and if linked to biofuels production, a most forward looking option. Nigeria is the world largest producer of cassava, a feedstock for biofuels. Aggressive husbanding of the crop, however, requires forward planning to establish biofuel plants and also encourage the proliferation and standardization of the indigenous technology, the production of ogogoro (local gin). A national collection and quality control network will turn the ogogoro distilling industry into a support industry for biofuels.
The production of oil palm, another feedstock for biofuels, must be pursued much more aggressively than the current Presidential Tree Crop Initiative and also the reintroduction of the planting of jatropha (lapalapa) both at peasant farm level and also in plantations because of its easy cultivation, its being indigenous to Nigeria and great viability as a feedstock to bio-fuels. The cultivation of non-food plants should also be introduced.
Emulating the Brazil Model
(v) Nigeria must emulate the Brazilian model where development of alternative fuels has tremendously strengthened the economy. 25% of Brazil domestic energy stock is from biofuels. It is a safe development model because though Brazil has substantial petroleum deposit, she has realized that the combustion engines` future fuel is alternative fuels
Aggressive Pursuit of the 34 metals Initiative
(vi) The 34 Metals Initiative to tap the abundant resources in the Solid Mineral sector should be re-invigorated and pursued aggressively with 2012 timeline to diversify the base of the economy. .
(vii) Investing in Development of Technology
Nigeria must also use oil wealth to develop her technological base to support agriculture and the industry, especially the use of technology incubators, positioned proximate to defined growth centres. Currently, Nigeria’s primary products export is 98%, while her export of technology is 1.7%.
(viii) Massive and Effective Tax Reforms
Nigeria must design and implement urgently an effective tax system to bring all taxable adults under the tax net and at the appropriate taxation level. In the emerging scenario, all must be taxed for all to survive.
(ix) Massive and Effective Investment in Infrastructure
Investment in infrastructure must be massive, effective and efficient. A nation with 71.1% of its population without electricity cannot pretend to be developing.
(x) Establishment of Departments of Future Fuels in Selected Universities
Departments of Future Fuels should be established in selected Universities for studies in core Future Fuels Sciences and the multi-disciplinary Future Fuels Policy Administration.
(xi) Think Tank on Future of Nigeria without Petroleum
The Nigerian Government should set up a disciplined Think-Tank on the Future of Nigeria without Petroleum. It must be lean and efficient with responsible membership and generate the options to manage the disengagement process.
(xii) Massive Investment in Citizens
Nigeria must invest massively in her citizens to offer them both empowerment and opportunities. The examples of Japan and Singapore have shown that the citizenry can make the difference even when there are no natural resources.
[1] Kaufmann, Arnold, The Science of Decision Making, An Introduction to Praxeology, World University Series, 1968, page 10 – Praxeology, Science of Action, is a word coined by Kotarbinki from the Greek word, Praxis (Action).
[2] Lindblom, C., The Science of Muddling Through, Public Administration Review, Spring 1959.
[3] Descartes is the 19th Century French Philosopher who prescribed the logical method for planning and decision making. The successor theoretical planning model, the Rational Comprehensive Model, is a maximization model which aims at finding the greatest possible value in a planning or decision making process
[4] Amory B. Lovins – Winning the Oil Endgame, Earthscan, UK. .2004. p.2
[5] EPR Generation III+ Nuclear Plant with a lifespan of 60 years. It was originally programmed for commissioning in 2009. It has suffered from cost over-run and implementation problems. It is now been programmed for commissioning in 2012
[6] China has commissioned 5 Westinghouse AP 1000 power plants but planned that 20 plants to be on stream by 2020
[7] Amory B. Lovins, Winning the Oil Endgame, Earthscan, UK, 2004.
[8] Herman Kruippers, Business Team Manager, Innovation and Research, Shell Global Solutions, November 2000
[9] Bio-chemical and “thermo-chemical that produce “drop in” fuels like “green gasoline,” “green diesel,” and “green aviation fuel” has advanced, fourth-generation biofuels are yet to be properly classified some have referred to it as the biofuels created from processes other than first generation ethanol and biodiesel, second generation cellulosic ethanol, and third generation algae biofuel. Some fourth generation technology pathways include: pyrolysis, gasification, upgrading, solar-to-fuel, and genetic manipulation of organisms to secrete hydrocarbons
[10] Wikipedia - Biofuel
[11] Reproduced from Coleman, Jones. Biofuels in the US: The view from the Auto Industry, Future Fuels Conference, November 2006, Washington, D.C.
[12] The keys issues in the Obama Administration Energy Initiative constructed with materials from October 2010 White House Website –http:// www.whitehouse.gov
[13] For Long Beach Sustainable City Action Plan Goals – Visit http://www.longbeach.gov
[14] For details visit http://www.shc.psu.edu
[15] Figures from the Nigeria National Planning Commission
[16] Review of the Implementation of NEEDS 2004 – 2007, National Planning Commission p.07
[17] Human Development Report 2007/8-Fighting Climate Change: Human Solidarity in a Divided World, UNDP 2008, pp. 2-35
[18] Ibid
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