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Strategy for effective energy policy formulation in developing countries: Nigeria

Emmanuel O. Benjamin (BUW)

Sustainable development is perceived as the driving force behind future growth in both developing and developed countries. Efficient sustainable energy generation and use are essential in promoting sustainable economic development, for this to happen, policies must widen access to reliable and affordable modern energy supplies and reduce the negative health and environmental impacts related to energy use (Jefferson, M. 2000). Renewable energy and energy efficiency are components of sustainable development thus the growth of this technology may lead to innovation and welfare gain. Designing policies to maximize immediate, local benefits that are visible, such as increased efficiency and productivity, safety and resilience, job creation, and poverty alleviation, can help ease this transition (World Bank 2012). However, the renewable energy technological gap between developed and developing countries and amongst developing countries is quiet wide. In order to narrow this gap down, in the presences of a lack of competitive energy market structure prevailing in developing country, government activities has to be reviewed. Moreover it is important to establish a well regulated sustainable energy market free from market distortion e.g. subsidies and monopoly while reflecting social and environmental cost. Sustainable development polices on energy ranges from feed-in tariffs and premium tariffs, quota obligations to tendering schemes. Formulation of policies should also emphasize investment in and tax incentives for research and development (R&D), demonstration project and buying down cost (twas, 2008). Developing countries do not necessarily have to spend close to the amount spent by developed countries on R&D but may rather commit a substantial annual amount to demonstration project and buying down cost. In the buy down cost approach, active technological alliance, through well-developed government institution, in collaboration with international and local private/public sector should lead to diffusion. The overall aim is to tailor the technology to the specific requirement of the host country which would eventually lead to a spill-over. Certain developing countries have being able to record breakthroughs in the areas of sustainable energy development using the aforementioned policy strategy. The most notable of these is Brazil which passed the avoided import oil bill in the 1970s, a policy which saved the country some US$ 40 billion over a period of 25 years using ethanol produced from sugar cane to substantially reduce fossil fuel (twas, 2008). Another example is the The Kenya Ceramic Stove (jiko) is one of the most successful cook stove initiatives were 780,000 of these stoves were disseminated. The program promotes a stove made of local ceramic and metal

components, with anefficiency close to 30 percent, by private entrepreneurs without government subsidies at affordable rates to low-income households in Kenya. The United Nations has been successful in replicating the Kenyan project in Malawi, Rwanda, Senegal, Sudan, Tanzania and Uganda amongst other countries (twas, 2008). In Nigeria, government sustainable (renewable) energy strategies are mere statements and frameworks rather than concrete market-oriented policies (Mohammed et al. 2013). According to the review of Ajayi and Ajayi (2013) on current legislation and the future of renewable energy in Nigeria, the authors stated that Regardless of the fact that the governments desire and are willing to implement the policy statements, they cannot single handedly carryout the implementation to an enviable level. Collaboration with the private sector cannot be overemphasized. Moreover to promote and encourage private partnership, some policy issues that discourage the growth of RE development must be addressed and strategies put in place to further its development. For Nigeria to toll the path of sustainable (energy) development and growth, policies in their current form are not sufficient. There is a need to review a number of factors, e.g. market structure and infrastructure in its current state, minimum market standard required for effective policy implementation and socio-economic impact of future directives and policies. This can be achieved by a multidisciplinary research project on the potential effect of comprehensive policy on sustainable energy development in the Nigeria context. Reference: Ajayi, OO and Ajayi OO, 2013 Nigeria's energy policy: Inferences, analysis and legal ethics toward RE development. Energy policy 60, 61 67 Jefferson, M. 2000. Energy policies for sustainable development [http://bbs.cenet.org.cn/uploadimages/20053810181399130.pdf] Mohammed, Y.S., Mustafa, M.W., Bashir, N. and Mokhtar A.S. 2013.Renewable energy resources for distributed power generation in Nigeria: A review of the potential. Renewable and Sustainable Energy Reviews. 22, 257 268 twas, 2008 Sustainable energy for Developing Countries [http://twas.ictp.it/publications/twasreports/SustainEnergyReport.pdf] World Bank, 2012. Inclusive Green Growth: The Pathway to Sustainable Development, U.S: Washington D.C Note: Some extracts were taken from the Master thesis title Renewable Energy in Developing Economies Innovation, FDI Dynamics & Policy Options in selected countries by Emmanuel Benjamin