Ever caught yourself wide-eyed and amazed at peak performers, wondering how they consistently outshine others…
By Dr. Justice O. Derefaka (MNSE)
Agreed that the transition of the energy system towards low-carbon energy sources is paramount in addressing climate change. But we must also note that the current energy transition is not the first the world has experienced. Previous transitions were mainly the result of a push for economic prosperity: first moving from traditional biofuels (primarily wood) to coal, next the development and adoption of refined oil products, flowed by the increased reliance on natural gas. Whereas the current energy transition is primarily driven by climate change, it will only be successful if it simultaneously provides energy security—safe, reliable, resilient, and affordable energy—and economic stability.
A combination of scalable solutions that are politically and socially, commercially, and technically feasible is needed to make the transition to a low-carbon or emission-free future. All technologies have a role to play in an energy system guided by climate goals and rational economics. From repurposing infrastructure to testing novel business models.
The key to effectively combating climate change at the needed pace will be to speed up the development and use of technology to decarbonize energy. We must all work together to identify practical solutions to decarbonize the energy mix and catalyze their implementation. We also need to speed up the adoption of cutting-edge technologies that have the potential to significantly reduce greenhouse gas emissions from the energy sector. Scaling is required for a number of high-potential technologies and routes. And the reason for this is that the key to combating climate change will be technology to decarbonize energy. And the success or failure in combating climate change depends on how well energy value chains can reduce their footprint in greenhouse gases (GHG).
The transition of our energy system is complex, and experience shows that transformation does not happen overnight, and countries or regions are not starting from the same place. The most developed economies and societies of today were built on vast amounts of cheap fossil fuels. As economies develop and become more complex, energy needs increase greatly. Many emerging or developing countries have untapped fossil fuel resources that they intend to use to advance their respective economies and to create opportunities for their people to flourish. Different regions or countries worldwide are facing different challenges. Transitioning to a low-carbon or emission-free future constitutes an extraordinary challenge and requires a mix of scalable solutions that are socially, politically, economically, and technically viable.
And so, a question is asked – What is the Energy Transition and from my perspective does it or why does it matter in the first place to Nigeria, Africa, and other developing nations? The energy transition matters to us as a developing nation and by extension as Africans largely because the main challenge facing our society today is how to meet the rising energy demand and climate change. It matters to us because of the 759 million people in the world who lack access to electricity, Sub-Saharan Africa accounts for approximately 580 million. And around 900 million people are without access to clean cooking in Africa. It matters to us because in Nigeria, over 93 million people lacked access to electricity. It matters to us because as an oil and gas nation, a sudden shift from fossil-based systems of energy production and consumption to renewable energy does not augur well with us – My point is that over a protracted time of low carbon transition, oil and gas will continue to be a component of the global energy mix.
As a nation, we need to harness our abundant natural resources to provide clean and efficient energy for our people as well as supply world markets with a broad portfolio of energy options. As well as supporting the global endeavor to alleviate energy poverty as envisioned in the United Nations’ Sustainable Development Goal 7. This is our approach to the issue of renewable energy and the energy transition, whilst also acknowledging our commitments to net-zero as a nation, there is no gainsaying the fact that Nigeria requires fossil fuel as its baseload energy source. We believe that multiple pathways to the energy transition should and must exist to ensure that no country is left behind in the process of achieving net-zero by 2050 and of course 2060 for Nigeria. For the author, a ‘just’ energy transition pathway is one with a mix of innovative technologies, investment, business strategies, government policies and regulations that will enable developing nations like Nigeria to transition from its current energy system to a low-carbon energy system. The Federal Government of Nigeria (‘FGN”) knows its action is essential to enable the evolution of the energy system and thus believes innovation, technology and policy will be the key drivers of change. And no doubt, each will continue to evolve.
In August (2022), just a month or so ago, Nigeria launch its Energy Transition Plan and a pathway to achieving net-zero emissions by 2060. What does this plan do (a) in terms of solving the problem of energy poverty and Nigeria’s climate ambitions and (b) mean for the oil sector in the short and long term?” First off, the Nigerian Energy Transition Plan will showcase the country’s pathway to achieving net-zero emissions by 2060. It will demonstrate Nigeria’s leadership role in enabling a just and equitable climate future for Africa, with the ultimate objective of mobilizing the finance required to jumpstart the implementation of the Plan. The Energy Transition Plan will highlight Nigeria’s commitment and ambition in achieving carbon neutrality while also ending energy poverty, which will lift 100 million people out of poverty, drive economic growth, and bring modern energy services to the entire population. Specifically for the oil and gas industry, the Energy Transition Plan is aimed at boosting investments for energy project development to address increasing energy poverty and ensure energy sustainability with gas playing a pivotal role. The petroleum industry will also assist reduce emissions by the electrification of the economy, such as the supply of the gas power production necessary for flexible capacity. In the short term, the petroleum sector will facilitate the establishment of baseload energy capacity and address the nation’s clean cooking deficit in the form of LPG. There are a range of decarbonization activities that could be pursued (gas flare reduction, emissions targets for oil & gas industry). LPG and gas-to-power are near-term levers to improve gas commercialization and provide decarbonization benefits
And as a result of the role of natural gas in Nigeria’s Energy Transition Plan, the Ministry of Petroleum Resources has seen the necessity of boosting gas commercialization to aid both new and current gas power plants. Using natural gas is already helping to reduce carbon dioxide and improve air quality where it replaces coal or diesel. Natural gas for us is at the heart of the energy transition and represents the first step in the journey to renewables away from oil. Already, the FGN has declared that gas is its transition fuel, and represents a destination fuel, as the nation envisage that it will be part of its energy mix by 2060, given the vast resources that can be commercialised and utilised. This validates gas a viable and transformational fuel for industrial development. This is why President Muhammadu Buhari who is also the Honourable Minister of Petroleum Resources declared 2021 – 2030 as the “Decade of Gas” development for Nigeria which provides the fulcrum for focusing effort and resources required at making gas the centrepiece of Nigeria’s economy by 2030. The FGN has also established a robust and workable plan as well as a governance framework to accomplish the Federal Government’s Decade of Gas objective from 2021 to 2030 and beyond.
The Nigerian petroleum industry is also responding in several ways to climate change issues by incorporating innovative technologies alongside climate-focused Environment, Social and Governance (ESG) principles into our business strategies. And this is an indication that, at least for the foreseeable future, the current global energy mix will continue, albeit with a higher dominance of hydrocarbon energy sources. Let me quickly add here that in recognition of the Decade of Gas initiative, the recently passed Petroleum Industry Act (PIA) 2021 has kick-started tremendous changes in the industry. The new law will improve the petroleum industry’s reputation, pave the way for new investments, create jobs, support the economic diversification agenda, and strengthen Nigeria’s ability to fulfil the world’s expanding energy demand. There are generous incentives to enable development, distribution, penetration, and utilisation of gas, which means we will need the Pipeline industry in the development and construction of pipeline infrastructures both onshore and offshore.
Back to the topic of discussion. This article’s focus, in one way or another, is on how to further speed up the worldwide adoption of technologies with a high potential for decarbonizing energy. Why is this important? To decarbonize energy, action must be taken more quickly, broadly, and deeply. It necessitates both the broad use of currently available, market-ready technology as well as the creation of brand-new ones. While “energy business as usual” will not be enough to stop climate change, there are a number of reasons why a speedy remedy is not possible. One is trade-offs: Energy investments and policies must not only be sustainable, but also affordable, accessible, and secure in terms of supply. The second factor is size and time lag: energy infrastructure requires a lot of capital investment and often lasts for several decades, so investments made today set the course for future development. The third factor is innovation pace. The usual energy technology innovation cycle takes a long time, sometimes decades, from idea to large-scale implementation, which maintains the dominance of existing fuels and technologies.
Advances in technology have led to breakthrough improvements in varying industries over the past few decades. Today’s businesses use technology extensively to automate and re-engineer their processes – to improve scaling capacities and optimize their procedures.
Innovation is another name for technology, and in business, innovation is used to describe improved services, products, or rapidly changing service requirements. And because the world is undergoing an energy transition, innovation will be critical to overcoming the many challenges of this transition.
Unsurprisingly, there is no “silver bullet” technology or method to decarbonize energy; instead, a variety of technologies must be used, each of which may be implemented at a reasonable cost depending on the market, the preferences of the country, and the existing infrastructure.
Of course, other elements to take into account include the system costs and value of various technologies, which will vary depending on local conditions in other nations. An evaluation of the system’s costs and value, however, is outside the purview of this article.
Be that as it may, let us agree on one key component – that the transition to sustainable energy is dependent on innovation. Enhancing current procedures and coming up with fresh approaches to addressing the demands of many players, adds value to the economy.
Technology innovation increases the range of alternatives and possible strategies accessible in the context of accomplishing long-term policy goals, and it gradually lowers the costs of doing so. Technology innovation does not evolve in a vacuum: the structure of the market, public support for entrepreneurship, and direct government investment all influence how rapidly new technologies emerge and are adopted.
This is as true for energy as it is for other sectors of the economy. It is crucial to acknowledge the pressing demand for more energy with less of an environmental effect. Setting high goals to deal with these difficulties is also important. But now that that has been done, the next stage is to carry out these plans. Not as easy as it seems.
“Innovation requires long hours of arduous effort in partnership with others” – Dr Derefaka
This article believes that the most crucial aspect in ensuring that plans are carried out is creativity and/or innovation. Innovation, put simply, is the creation of an idea or a product that solves a problem in a fresh, improved manner. It is most likely most closely related to technology in energy circles. And we should not take innovation for granted.
If it is not promoted and ingrained in the new generations entering the workforce, it will not occur at the scale we require. Although history has romanticized the concept that creative ideas are the result of lone labor and isolated flashes of inspiration, or the “eureka” moment, the truth is very different. It typically requires long hours of arduous effort in partnership with others. To me, innovation is just that.
Since the beginning of the oil and gas industry, it has been a vital component at its core. On the flip side, it is unavoidable that people and economies will require more and more energy. According to the International Energy Agency (IEA), global energy demand is anticipated to increase by close to 40 percent by 2040. To meet this need, several sources of greener energy will be required. Fossil fuels currently account for a large part of global energy production. And, as I have said many times before, take it or leave it, oil and gas will be necessary for decades to come.
To transform innovative clean energy concepts into products that can be sold, or to move ideas from demonstration to commercial dissemination – a stage I refer to as the “valley of the shadow of death,” it is imperative to have a strong commercialization plan. Commercialization flourishes in environments backed by strong institutional structures and other governmental procedures in addition to a favourable investment climate.
Without an innovation strategy, efforts to improve innovation can easily devolve into a jumble of well-publicized best practices: The problem is that an oil and gas organization’s ability to innovate is determined by its innovation system – a set of interdependent processes and structures that governs how the company searches for new problems and solutions, synthesizes ideas into a business concept and product designs, and chooses which projects to fund.
Individual best practices necessitate compromises. Adopting a single technique typically necessitates a slew of other adjustments to the oil and gas organization’s innovation system. Without an innovation strategy, an oil and gas business will be unable to make trade-off judgments and select all the components of the innovation system
Ultimately, even if a clear business strategy exists, without an innovation strategy, different segments of an oil and gas organization might easily end up pursuing contradictory agendas. Diverse viewpoints are necessary for successful innovation. The strength of variety is blunted or, worse, self-defeating without a strategy to integrate and align different perspectives around common aims.
The process of designing an innovation strategy, like any effective plan, should begin with a clear understanding and articulation of specific objectives connected to assisting the energy organization in achieving sustainable competitive advantage.
This necessitates moving beyond all-too-common platitudes like “We must innovate to expand,” “We must innovate to create value,” and “We must innovate to remain ahead of the competition.” That for me is not a strategy. They give no indication of the types of innovation that might matter (or won’t)
Natural gas will play an important part in addressing our future energy needs, and it may be exploited in a complementary manner to oil, benefiting both resource owners and energy users. The potential for a sustained large rise in gas demand is obvious and liquefied natural gas (LNG) will be a crucial driver in meeting that need.
The creation of a larger, more dynamic, and more complicated gas market will be fuelled by the increase of LNG, as well as the emergence of gas to liquids. There are significant hurdles ahead in that market, not least in terms of supplying the new infrastructure and the vast expenditure required to carry gas across greater distances.
Meeting those problems will necessitate action on the part of all parties concerned. The energy industry, on the other hand, has a track record of effectively overcoming such obstacles, and there is every reason to believe that the potential of gas will be realized by leveraging innovative and disruptive technologies.
The world will need to invest heavily in energy production, both in traditional sources and in renewables. The broader perspective, of course, is a world looking for affordable and reliable energy to drive both economic growth and improved living standards. The global middle class is expected to double to nearly 5 billion, which means twice as many people will need commercial fuels for heating, cooling, mobility, and manufacturing.
The benefits of natural gas are well documented. It is flexible. Its supply is abundant and diverse. Its range of uses is still expanding. And it makes economic sense. Natural gas is a cleaner-burning fossil fuel, economic to produce, scalable, and complementary to intermittent renewables. Natural gas is one of the few energy sources that can meet many energy needs: to generate electricity, heat homes, supply the power industry, and fuel ships and trucks.
According to the International Energy Agency, there are enough recoverable natural gas resources to last more than 200 years at current levels of consumption. Despite the critical role of renewables, they cannot provide all the world’s energy needs. Renewables chiefly power electricity, which only meets around 20% – 25% of global energy demand.
There is no single or simple solution to turn emissions around. Multiple approaches and technologies – including much greater efficiency are required across all parts of the energy system, alongside a clear-eyed appreciation of where emissions occur and what the abatement options are in each area. Plus, innovation and technological advancements have a significant impact on industry and society, as history and time have demonstrated.
That is why, now that we understand the importance of the environment and see it as an asset that must be protected, we have a greater responsibility than ever to employ technology whose primary goal is to conserve the environment and the planet. If the world wants to meet expanding energy demand for human development while avoiding catastrophic climate change, it must transition to a cleaner energy system.
Many causes, including economic growth, customer choice, emerging creative technology, and national legislation, are driving this transformation. Collaboration across industries is critical to achieving net-zero emissions.
The industry must work with governments to highlight the benefits of gas in delivering a sustainable energy future, as well as to encourage the implementation of regulations and policies that will give gas a level playing field on which to compete and claim its rightful place as the world’s leading energy source.
Dr. Justice O. Derefaka (MNSE) is the Technical Adviser (TA) on Gas Business & Policy Implementation to the Honorable Minister of State, Petroleum Resources, Ministry of Petroleum Resources (MPR), Federal Republic of Nigeria. In this role, he drives the National Gas Policy mirrored in the Petroleum Industry Act (PIA 2021) implementation – a supply-side enabler, capable of provoking and triggering commercial interests and investments in gas utilisation, treating gas as a stand-alone commodity, creating a distinct midstream decoupled from upstream gas; promoting gas distribution pipelines in gas-scarce areas, delivering massive volumes of gas daily to industrial demand centers and commercial clusters, and strengthening a thriving and cost-effective virtual pipeline delivery system that enables flexible, remote, and micro-volume delivery to gas consumers across the country.
He is the pioneer Program Manager (PM) of the Nigerian Gas Flare Commercialization Programme (NGFCP); and Chairman – Capacity Building Development (CBD) Subcommittee as well as Program Manager (PM) – AutoGas Subcommittee, of the National Gas Expansion Program (NGEP) in the office of the Honorable Minister of State for Petroleum Resources.
Dr. Derefaka is a Marine Engineering graduate from the Rivers State University (RSU), Port Harcourt, Rivers State, Nigeria. He has a master’s degree in environmental management from the University of Lagos (Unilag), Nigeria and a second master’s degree in Sustainability Leadership from the prestigious University of Cambridge, United Kingdom (UK). He also has a doctorate degree in business administration from the University of Bradford, United Kingdom.
Prior to the above roles, Dr. Derefaka manages health (i.e., occupational), safety and environment (HSE) for all pipeline asset for the Shell Petroleum Development Company (SPDC). Previously, he was with Shell Nigeria Exploration and Production Company Limited (SNEPCo) as the Head, Environment and Social Performance. In this role, he identifies and manages critical “Non-Technical Risks – NTRs’” issues – which is well researched and documented that 73% – 75% of oil and gas project delays are attributed to NTR causing project cost overruns and delays due largely to external stakeholders. He also drives and provides statutory regulatory Compliance and environmental expertise to SNEPCo Deepwater projects (DWP) by ensuring environment and Social/community Performance deliverables are fully embedded in SNEPCo Deep water projects and Bonga Floating, Production, Storage and Offloading (FPSO) operating asset. At different times in SPDC, he was the Corporate Head, Materials and Waste Management Discipline and subject matter expert (SME) for Shell Companies in Nigeria (SCiN) and Shell Gabon, respectively.
With more than 22 years’ work experience in complex corporate environments in business and projects related roles, Dr. Derefaka has a proven Intellectual Leadership in Managing People, Operations and Financial Resources, as well as a skillset in Oil, Gas & New Energy Value Chain & Asset Management, plus Identifying and driving Oil & Gas Business Opportunities.
He has proficiency in leading a complex group of people, inspiring them to achieve beyond their own expectations whilst communicating effectively with a wide range of audiences and has sustained impact with people at all levels. He unites people with diverse agendas by enabling them to see the benefits of cooperation and of course the bigger picture of the organization. He is business and stakeholder focused with aptitude for identifying and building long lasting relationship for business success.
He is an effective and resourceful leader who can build and manage divers and high performing teams with a proven track record in delivery of medium scale facility/infrastructure activities, leading multi discipline teams in challenging environments.