When Donald Trump recently told the United Nations that climate change was a ‘con job’, he voiced a scepticism that still echoes—not because science is wholly invalid, but because nations whose survival hinges on hydrocarbons fear being asked to mortgage their present prosperity for a distant, uncertain ideal. For Nigeria, the question is not whether to contest climate theory but how best to deploy our hydrocarbon assets in a world that is evolving rapidly, and to do so through a carefully managed transformation rather than a reckless leap.
The starting point is clear: oil remains Nigeria’s most reliable source of revenue and foreign exchange. In July 2025, production reached roughly 1.71 million barrels per day (crude plus condensates), a 9.9 percent year-on-year increase. That performance secured Nigeria’s place among Africa’s top producers and underscored how quickly output gains can stabilise macroeconomic fundamentals. Oil rents, revenues net of production costs, have historically contributed significantly to GDP, accounting for about 5.5% to 9%, depending on your source. More critically, oil and gas still anchor export earnings, government budgets, and the foreign-exchange buffer that props up the naira. Without them, the fiscal stress would be acute.
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Yet this national strength sits beside a national weakness. Only 61 percent of Nigerians had access to electricity as of 2023, and some 86 million citizens remain unconnected to the grid. For households and firms, the default solution is diesel or petrol generators, expensive, noisy, and noxious. Here lies the real tension: oil is indispensable today, while renewables hold out the promise of tomorrow. The task for business leaders is not to treat them as binary choices but to ask how Nigeria can maximise the value of hydrocarbons while using them as the capital base for a diversified, lower-carbon economy.
For a start, Nigeria must move beyond mere extraction and into upgrading. Crude exports leave the economy at the mercy of commodity cycles and geopolitical shocks. By contrast, downstream industries, refining, petrochemicals, fertilisers, plastics, and gas monetisation, offer higher margins, more stable demand, and a broader base for industrial growth. Exploiting the entire hydrocarbon value chain will generate jobs, expand exports, and reduce dependence on imported refined products.
“Exploiting the entire hydrocarbon value chain will generate jobs, expand exports, and reduce dependence on imported refined products.”
Second, revenue management requires far greater discipline. Oil windfalls cannot be allowed to vanish into consumption. They must be channelled into infrastructure, human capital, research, and seed financing for new industries. Norway’s sovereign wealth fund and the UAE’s stabilisation reserves provide instructive models. Nigeria needs a transparent and enforceable framework that ensures oil dollars finance long-term transformation rather than short-term politics.
Third, security and governance must be tightened. Oil theft and pipeline vandalism have bled the treasury of billions, with losses once estimated at between 5 and 20 percent of output. The Trans-Niger Pipeline, among others, remains vulnerable to sabotage and illegal tapping. Recent government crackdowns aim to raise production to 3 million barrels per day, but unless theft and inefficiency are decisively addressed, the full benefits of higher output will continue to slip away.
The wider global context cannot be ignored. Capital markets are tilting toward ESG mandates, and fossil fuels face increasing investor scepticism. The energy transition is no longer mere rhetoric; it is reflected in real capital reallocation. Yet Nigeria must respond with pragmatism, not panic. Renewables have a role—particularly in off-grid solar, small hydro, biomass, and decentralised systems. But they are capital-intensive, heavily import-dependent, and still modest in scale. As of 2023, Nigeria’s installed solar capacity was only about 112 MW, while the Energy Transition Plan ambitiously targets 42 GW of grid capacity by 2030, including 6.3 GW from decentralised renewables. Bridging that gulf will demand partnerships, innovation, and patient capital.
Projects like the 200 MW Ashama Solar Power Station in Delta State are promising, yet even they pale against Nigeria’s unmet power demand. Renewables, therefore, should be seen not as substitutes for hydrocarbons but as complementary plug-ins—especially for rural communities and to reduce generator dependence. The most attractive opportunities may lie in hybrid models: gas-fired plants integrated with solar, industrial parks powered by captive gas plus storage, and bioenergy plants converting agricultural waste such as rice husks and cassava peel into electricity. These niches offer real upside with manageable risk.
Nigeria also has an underused lever in climate finance. Wealthier nations have pledged billions to support “just transitions”, but disbursements remain sluggish. Nigeria should negotiate from strength, treating its hydrocarbon assets not as liabilities but as collateral. Grants, concessional loans, carbon credit revenues, and technology transfer must be pursued not as charity but as just compensation for preserving developmental space. If climate equity is to be more than rhetoric, oil-dependent nations must be given genuine support to transition without economic ruin.
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Critics will argue that doubling down on oil delays the inevitable. The better answer is that bold pivots without foundations are reckless. Nigeria’s fiscal stability, its currency, its employment base, and its national security still depend on hydrocarbons. To abandon them prematurely would be destabilising. At the same time, Nigeria is not monolithic. Certain states, cities, universities, and industrial clusters can—and should—adopt renewables early as pilot models. But the federal axis must remain firmly anchored on oil until alternatives are both scalable and affordable.
For investors, the challenge is not ideological but financial. Oil provides a relatively predictable internal rate of return, while renewables offer long-term upside but with uncertain inputs. The shrewdest capital allocators will balance their exposure, hedge risks, and time their entry points.
We should neither romanticise solar farms nor demonise crude. Both belong to Nigeria’s energy future, but one of them is already our bedrock. The rational course is not to choose but to sequence: to use oil revenues to finance the transition, to invest in capacity and regulation, to pilot renewables sensibly, and to extract maximum value from hydrocarbons while the global energy map is redrawn.
The real battlegrounds are institutional: trade policy, tax incentives, local manufacturing, energy regulation, and anti-corruption reforms. A 200 MW solar farm achieves little if tariffs, grid access, local-content rules, and offtake contracts are misaligned. Similarly, refining capacity cannot expand without ports, pipelines, and investor confidence. Strategy matters more than symbolism.
Finally, Nigeria must also watch global demand patterns. If downstream appetite for petrochemicals, plastics, and specialty chemicals stays robust, Nigeria should position itself as a supply hub, not merely a crude exporter. And as global capital reallocates, our oil sector must meet ESG benchmarks, cutting gas flaring, tightening methane controls, and publishing credible disclosures, so assets do not become uninvestable.
The real risk for Nigeria is not climate change itself but in adopting a naïve posture: discarding competitive strengths before building credible alternatives. We cannot leapfrog without a foundation. Oil is that foundation. Our task is to ensure it becomes the launchpad, not the chain around our ankles.
In the end, Nigeria’s business community should treat oil not as a sin but as a strategic enabler; renewables not as a cure-all but as a useful hedge; and the transition not as a rupture but as a calibrated evolution. The world may move fast on climate, but Nigeria must move wisely.
Dr Hani Okoroafor is a global informatics expert advising corporate boards across Europe, Africa, North America, and the Middle East. He serves on the Editorial Advisory Board of BusinessDay. Reactions are welcome at [email protected].
