Last week, I watched a conversation on the exit problem African VCs don’t want to discuss. Besides the touchpoint on climate tech (s/o Toyin from the Catalyst Fund) - an aspect that made me paused was on Mergers and Acquisistions announcements - or rather, the lack of, within African tech and tech-adjacent spaces.

Acquisitions are happening in a sequence of “silent M&As” - this wasn’t the first time I was hearing this phrase - Frequently, but not being publicly celebrated or widely reported business shifts. From the conversation; these are some reasons for silent M&As;

1. Shifting expectations away from the traditional model of building a company towards the “IPO tag.”

2. Rather than simply failing, banking on strategic consolidation happening on the downlow.

3. M&As becoming a pragmatic survival and growth strategy rather than a failure exit.

I thought, yes sure - this provided some clarity to the WHY and brings distinctions in matters of exits and buyouts in silence. But for me, I see silent M&As as not just an exit story but a symptom of what happens when companies are trying to build scalable businesses on top of unresolved infrastructure constraints.

In the Nigeria' fintech ecosystem; GoLemon shut down after failing to secure additional funding, Edenlife now services corporate cilents, Brass ended its run as an independent company by folding its operations and customers into Paystack Microfinance Bank. One a shutdown; the others consolidation.

But founders in Nigeria and across Africa aren't scaling on top of solved infrastructure - they're building the infrastructure and the business at the same time.

Another phrase, i’m seeing is what the ecosystem notfies as a “funding winter”. In July 2026, six Nigerian startups across education, agriculture and deep tech raised a combined $4.9 million in disclosed funding. The previous month, 18 startups raised $115.2 million. I’m not presenting this as a complete diagnosis for the ecosystem - from where i’m writing…one large deal can shift the numbers significantly from month to month. But a drop this sharp still captures the wider mood: funding is more selective, large cheques are harder to find and startups without long runways are being pushed towards harder decisions.

I’ll reference here, Ten Years After Paystack as a reminder that venture capital’s model is optimised for companies that can show rapid growth and reach liquidity. With that logic, the VC model is found to be least suited to the sectors where Africa’s infrastructure gaps are largest: energy, agritech, healthcare logistics and last-mile delivery. Paystack shouldn’t be the blueprint for a continent that needs physical infrastructure like power grids to truly sustainable a digital economy.

The problem isn’t that VCs are misdirected. They’re doing exactly what they were designed to do…back companies that scale fast and return capital. The problem is that Africa’s most urgent constraints aren’t software problems. They’re infrastructure problems. And of all infrastructure, reliable electricity is the one that will determine whether African tech and digital economy truly makes another mark in the coming decades.

A startup can build brilliant software, raise capital and acquire thousands of users, but it still operates inside the same infrastructure economy as their customers. Its offices need power. Its suppliers need power. Its delivery partners need electricity. And, most importantly, its customers need enough disposable income after solving their own infrastructure problems to pay for what is built.

The bottom line? Venture-backed software cannot outrun a broken hardware reality. And in Nigeria, that hardware reality is our grid.

This hit home for me in July, when I shared a stage with Seun Suleiman, who plays a central leadership role in executing the Presidential Power Initiative (PPI). You’re probably very unfamiliar with it - the PPI origin is from 2018 under President Muhammadu Buhari.

The goal? Take the current 4,500MW operational grid capacity to 25,000MW, alongside the expansion of transmission and distribution networks that can efficiently evacuate tapped power to customers, as well as a standard system upgrade (FGN Power Company).

If you cannot capture the magnitude, it’s a lot. A whole deal, but very necessary.

Nigeria sits on stranded generation capacity - power plants capable of producing more than the grid can actually carry - because transmission investment has consistently lagged behind generation investment. You can build a power plant faster than you can build (or in the real case: import) the wires and substations to move what it produces, and that mismatch is exactly the kind of long-dated, capital-heavy, low-liquidity project that VC money was never going to fund and that public/loan financing has struggled to sustain across multiple administrations. Every change in government has meant a partial reset of financing commitments and priorities, which is its own silent tax on a programme like this.

So if fully successful, the PPI would address many of the core issues plaguing Nigeria’s ageing grid.

Now, imagine the wider macroeconomic climate in Nigeria with successfully delivered electricity infrastructure beyond the PPI.

lifestyle-convenience businesses; GoLemon, Eden Life, even Brass are all responding to a country with the largest population in Africa, but daily reduced economic vitality.

“Nigeria doesn’t have a middle class,” another phrase I’ve heard many times. But, while reliable electricity does not solve poverty itself - unreliable electricity makes almost everything more expensive. Those costs eventually enter product prices, operating expenses and purchasing power for ‘anything as a service’.

The World Bank estimates that Nigeria’s unreliable power supply produces annual economic losses of $26.2 billion the equivalent of roughly 2% of the GDP. It makes the problems more visible when - 62.5% of Nigerians had access to electricity in 2024.

And access, of course, is still not the same thing as reliability: access means being connected; reliability means having power available when you need it. Access and reliability; two different gaps with two different price tags, and a market-size slide that only accounts for one of them is loudly wrong. That is the part a “200 million people” TAM slide can hide.

Population number is not the same as Total Addressable Market. Although, more teams are mapping better addressable market quotas than when I first met the ecosystem a decade ago. And that 200million population size? It’s about time for a discussion on that figure…

Now, to the existing startups pulling up pitch decks for Q4: an estimated 200 million people is not your market size if access to electricity infrastructure (disposable income allowance) isn’t reflected in your benchmark. This is obvious - but a person does not become your customer simply because they appear in a population or sociodemographic class. They become your customer when they can access, afford and repeatedly use what you are building.

I don't see silent M&A as evidence that the ecosystem is failing. I see it as evidence that the ecosystem is becoming more pragmatic about what survival, consolidation and value creation actually look like in this market. We’ve agreed that not every company will reach an IPO. Not every acquisition will be publicly celebrated. But there is something we cannot forget: building for Nigeria means building for customers operating on the backbone of a failing electricity grid.

Your average Nigerian customer is not operating in a normal market. We are making decisions around unreliable power, fuel costs, connectivity as infrastructure gaps. Those constraints aren't peripheral to the business. They are the market.

Everyone is trying to survive, especially the customers you are building for.

Until next time,
Oghosa

That stayed with me.

Not because they were talking about Africa, they weren’t - but because the underlying message was impossible to ignore: Invisible Infrastructure is where the next decade lies. My work in Policy over the decade has mapped clean energy infrastructure - not the physical infrastructure entirely but loads on how we set standards, distribution, verify impact, design market structures, and forming narratives with credible data.

Five months into 2026, I think we are already seeing that consolidation happen in the “invisible” energy industry - what I like to call the energy impact industry.

Recently announced was the merger between Agora Energiewende and the Regulatory Assistance Project (RAP) - two global independently influential organisations delivering the industry with date analysis, market predications and national outlooks - both combined now to an almost 300 staff worldwide with policy reach. Nothing the a16z discussions signalled - an M&A nonetheless.

And nowhere is that tension more visible than in Africa.

Here a new industry for carbon and climate infrastructure is forming. The companies deploying solar projects, distributing clean cooking solutions, tagging adaptation finance to mangrove restoration and soil carbon pilots across every region of the continent.

Everyone positioning themselves around what’s believed could become one of Africa’s largest future markets.

In February 2026, a ball dropped when KOKO Networks, one of Africa’s most visible carbon credit business filed for insolvency.

What happened in Kenya was not a story about product failure. Communities adopted KOKO’s clean cooking systems, I’d heard of them since 2021 - The clean cooking Industry poster project - replacing charcoal with bioethanol stoves. Refill price was subsidised along too the stove to encourage clean cooking practices. The model was fragile but simple...reduce emissions, convert the avoided emissions into carbon credits, then sell those credits under compliance of an evolving carbon market.

The Kenyan Government blocked Koko Networks sale of carbon credits.

KOKO Networks struggled to secure the approvals needed for participation in compliance carbon markets under the UN Climate Convention Article 6 mechanisms. The Kenyan Government refused to issue a “Letter of Authorization” allowing Koko Networks to sell carbon credits into compliance markets. Crippling the end mile revenue stream instantly.

And overnight, one of Africa’s most ambitious carbon revenue experiments collapsed affecting 700 employees, millions of households, and overall confidence in the market. This shut down came less than a year into the the World Bank MIGA insuring Koko’s investment for $179.6 million

If there’s anything being African teaches me, it is that nothing here - simple or complex… is ever truly straightforward.

And now, what happened with KOKO Networks exposed something bigger than one company’s oversight. It exposed structural structural defects in Africa’s carbon economy: uncertain pricing, fragile regulatory coordination, and a dangerous dependence on markets the continent is yet to truly connect true value with.

These aren't new problems, but KOKO made them impossible to really look away. If the market is going to mature, I think these are three things Africa must get right to secure its carbon markets.

a. Pricing certainty: how is the cost of Africa’s carbon positioned globally. When there’s a low to none existence for supply chain and manufacturing infrastructure for technical equipments. Look - majority of our solar panels, cables, energy storage systems and even these bioethanol stoves are still imported. The supply chain emissions don't disappear. They get absorbed into the project's footprint. How do you price your carbon credits with pre-existing scope 3 emissions?!

b. Governments having final approval over carbon market participation is necessary. Carbon is no longer just an environmental issue; it is becoming a sovereign economic asset. But across Africa, the market cannot function on uncertainty alone. Questions around how much of the national carbon budget gets sold and what’s kept in reserve; When carbon revenues flow should they be included in our fiscal plans or national budgets? What taxes will Carbon credits be exposed to, and what happens when African economies industrialise rapidly and the markets eventually becomes bigger than demand?

c. The carbon transparency infrastructure: Who is monitoring what is being credited? Who is settling pricing intelligence? Where will the carbon registry sit, who holds the keys, who funds the institutions that verifies Africa’s carbon credits. The one aspect I do have an answer to right now is who is building the data architecture that helps markets understand how much carbon credit capacity a region holds, and helping buyers identify the most suitable customers for their needs?

I predict M&As in the carbon credit industry across value chains as the market gains back confidence. EcoQuadrant Ai powered platform is building toward options for this visibility.

But ultimately, the continent will have to confront the gaps underneath all the optimism with data intelligence. Not whether we can sell carbon…but whether Africa is building an economy that survives if we cannot.

Till next time,

Oghosa

I grew up in a few countries, attending boarding school across all. One thing that somehow got school buzzed were between sports and arts - for the arts crew, it was everyone together for a trip to the cinema or theatre. It was one of the few moments to leave school grounds - actually felt like entering the real world in some occassions. For one evening or weekend, we traded uniforms for our own clothes and briefly became adults,..out in the city to catch a film, musical or play. And then for the rest of the term - sometimes years later - the experience stayed with me. Watching visual storytelling became attached to memories, friendships, holidays and even very intimate solo seasons. At home, my mum, siblings and I had our own catalogue of repeat-watch films. The kind nobody else ever knew of. To this day, I still remember passionately singing the entirety of the 1955 Oklahoma! soundtrack.

So, maybe film has always been part of my life. I just never fully connected those dots until I started trying to understand how the Nigerian film industry actually exists.

Nollywood - if again you are unfamiliar is one of the largest film ecosystems in the world, alongside Hollywood and Bollywood. Over the last three decades, Nigerian film has shaped culture for millions of Africans across the world. Fashion, music, hairstyles, language, slangs - all influenced by the stories we tell on screen.

But for such a rich, entertaining and culturally influential industry, there are still so many gaps. The obvious one being capital - that’s not where I hope to land today.

Although, over the last few weeks, I’ve found my way into some incredible rooms and networks discussing what capital for African media and film could actually look like. One shoutout has to go to MBO Capital for having me at their Financing Film Summit. [Shoutout to Dolapo and Nora Awolowo]. I met, drank and spoke with some of my on-screen favourites, while hearing something that has stayed with me ever since: Nigeria doesn’t have a film industry. It has a film community. And honestly, I understood exactly what they meant. Because much like the fuel industry (where i have worked in gas, electricity, renewables and now energy storage), everyone operating within it has to somehow find a way to win at one end… just to keep the machine moving. Revenue stacksss.

Over the weekend, I got to sit front row at the largest awards show for Africa film and media - the Africa Magic Viewers Choice Awards (AMVCAs). What a view that was. Over the night at least strongly heard from Funmbi Ogunbanwo - thay Nigerians have to pay better for this ecosystem to thrive beyond where our talent reaches. Funmbi, Wales and their crew cleaned up the market with this Production and possibly went home with the most number of awards from the night. PSA: go watch My Father’s Shadow which was the first Nigerian film in the Cannes official selection!

Friends who work in media distribution have explained how percentages work, how profits move, and how deeply the “family helping family” structure still shapes production.

But the actual missing piece I personally kept coming back to is waste. Waste in media. Waste in film. Waste in entertainment.

An Instagram page posted something along the lines of: “Who needs the Met Gala when African awards are the real fashion event?” And honestly, after seeing the AMVCAs this weekend, I understood the rage-bait.

Every hour spent creating breathtaking - and sometimes questionableeee red carpet looks in Lagos eventually leads to one question: What happens to all of it afterwards?

In Hollywood from what I’ve noticed - clothes are exhibited, stored and sometimes repurposed for another wear. Oh, and isn’t the unwritten rule of celebrity culture…never be seen in the same outfit twice?!

So in Nollywood where do these pieces go? Where do the costumes, elaborate stage designs and custom-made sets end up after filming wraps?

To add - here’s a Fun fact: Nigeria imports plywood - the same plywood used for stage builds, event backdrops and film sets. Because we don’t have film villages and engaged services for production hire - Nollywood is spending heavily on low ROIs infrastructure. We import toothpicks too, if you needed another wood-related plot twist.

And somewhere in all of this, I started thinking differently about waste in the film industry.

That curiosity led me to invite Soji Ogunnaike Co-Founder/Chief Creative Officer Rushing Tap Studios who is actively challenging how Nigeria’s film community is structured and reshaped. Through conversations with Soji and our growing Lagos Climate Network community, I started seeing the real challenges - but also the wealth opportunities - around 1) solving waste in media and entertainment 2) Cost of energy in film production 3) and the film’s role in the heavily Deep AI era.

I’d say watch this space. But honestly, wouldn’t you rather see me on the big screen? Cameraaa Action,… urgh.

Because the future of African film is not only about storytelling. It is also about what we build around the stories themselves.

Till next time,
Oghosa

#AFCON2026 hasn’t been without its challenges, but hosting a continental tournament across multiple cities requires a level of coordination, resilience, and infrastructure that very few countries African countries can sustain today. From transport to logistics, security to power demand, the pressure on systems especially energy systems - is immense.

That’s where The World Bank recent publication (released in December) is relevant (link in comments)... It highlights how Morocco’s #seaports are emerging as a strategic gateway for #hydrogen and low-carbon fuel development and trade, linking renewable energy potential with global and regional markets.

When a country hosts Africa’s largest inter-regional sporting event, it inevitably raises questions about how it is preparing its infrastructure - not just for today, but for the decades ahead.

It also opens up an interesting conversation, I believe, on what other semi finalist  #Egypt, #Nigeria, and our finalists #Senegal can observe and learn as about infrastructure readiness, energy resilience, and long-term competitiveness.

Beyond sport, #Morocco’s investments point to a broader ambition - one which is strengthening its role in continental connectivity, energy trade, and global supply chains. I’ve read several perspectives questioning how and whether Morocco’s approach truly supports wider continental growth.

But the reality remains - Morocco’s positioning around low-carbon fuels represents a significant opportunity for Africa’s role in a decarbonising global economy..think more investment, stronger continental influence on carbon compliance, and greater leverage in future trade rules - the list goes on.

With 2027 AFCON’s hosts #Kenya, #Uganda, and #Tanzania ...East Africa is already being positioned as the next epicentre of resilience.

So even in moments of championship, energy resilience and infrastructure tell a story.

PS. hugs to NGR this last week, we needed this win... thank you Senegal! 🇸🇳

In the age of ‘too much information’ and often not enough access to datasets to explore. Find below recently published or authors favourite databases across energy transition and climate stratgeies.

Know others that can be included ? send me an email <oghosaerhahon@yahoo.com> or comment below. Thank you, enjoy!

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Energy Trackers

1. Electricity Lawyer: Africa Energy Transition Tracker

2. Private Equity Energy Tracker | Private Equity Climate Risks Private Equity Climate Risks (peclimaterisks.org). The Private Equity Climate Risks consortium includes: Global Energy Monitor, Americans for Financial Reform Education Fund, Private Equity Stakeholder Project.

Hydrogen Trackers

1. International Energy Agency: Hydrogen Production and Infrastructure Projects Database

2. Clean Energy Demonstration Projects Database – Data Tools - IEA

3. CCUS Projects Database - Data product - IEA

4. Hydrogen Supply Chain Directory - Innovate UK: This directory shares the details of those who are currently producing, storing, transporting, and using hydrogen. It also showcases solutions-providers who may be able to help these end users meet their hydrogen targets.

5. Map the levelised cost of hydrogen from solar and wind energy worldwide - IEA

6. H2 Matchmaker | Department of Energy

7. PTX Business Opportunity Analyser (agora-energiewende.org)

8. National Hydrogen Strategies and Roadmap Tracker | Center on Global Energy Policy

Climate Change Tracker

1. OECD Climate Actions and Policies Measurement Framework (CAPMF)

2. Climate Bonds: Sustainability-Linked Bonds Database

3. Assessing Sovereign Climate-related Opportunities and Risks (ASCOR) : The ASCOR framework is composed of indicators for the transparent assessment of the progress made by countries in managing the low-carbon transition and the impacts of climate change.

Carbon & Related-Matters Tracker

1. World Bank | Carbon Pricing Dashboard (worldbank.org)

2. COP28 Climate Funds Pledge Tracker (nrdc.org)

3. Clean Investment Monitor | (United States) Clean Tech Investment

4. Carbon Majors dataset: In the seven years after the Paris Agreement was adopted at the end of 2015, 251 GtCO2e of emissions are linked to the 117 extant entities in the database. The database categorizes entities into three types: investor-owned companies, state-owned companies, and nation-states. Carbon Majors The Carbon Majors Database: Launch Report

5. Great Plains Institute State (GPI)’s Carbon Management Programe State Legislative | Major focus American States

Know others that can be included? Please send me an email <oghosaerhahon@yahoo.com> or comment below.

Till next time,
Oghosa

She began her career as an engineer working on fuel cells and hydrogen at Peugeot and Debis Systemhaus. Anne-Sophie holds an MSc from the Ecole Centrale Paris and an MSc from the University of Stuttgart.

In this episode Anne-Sophie shares her experiences as one of the pioneers on research into hydrogen and natural gas markets. She shares her four pillars that need to exist on the decarbonization journey.

Listen to full episode now!

Connect with our guest: Anne-Sophie Corbeau

Connect with the host:

Erik Rakhou | LinkedIn

Joachim von Scheele | LinkedIn

Oghosa Erhahon | LinkedIn

2023 was everything it had written on its tin. From the anticipated COP28 rounding up right before the holidays, to the launch of hydrogen strategy across many more countries and several reports on supply chain disruptions. 2024 could only be a cross correction, and another opportunity to demonstrate how ready we all are to meet our low carbon emissions (and the SDGs which have now cross the half way mark to 2023).

So let’s get into it - in no particular order, here’s headlines from 2023 I look forward to metaphorizing this year.

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1. Global Shift away from Fossil Fuels?, and more funding for underserved geographies

   • In what’s described as a groundbreaking move, countries at COP28 in Dubai reached an unprecedented agreement to "transition away" from fossil fuels, marking a historic turning point in nearly three decades of climate summits.
     Looking at what moves Oil and Gas producing companies take up as actions to a reaction to this move by the Climate Action community. Between the leaked documents, and reductions in funding for renewable projects by oil and gas companies (mainly echoed by poor returns).

   • Ending energy poverty remains one of the underlined topics, so keen to witness updates from the Hardest-to-Reach Fund - a $250M initiative to activate clean energy markets in Africa’s underserved geographies.

2. European Sustainability Reporting Standards (ESRS):

   • The European Commission has adopted the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive, setting a new benchmark for sustainability standards and reporting in the corporate sector.

   • More on Sustainability Reporting Standards: The Financial Stability Board announced that the work of the Task Force on Climate-related Financial Disclosure (TCFD) has been completed 'culmination of the work of the TCFD'. The IFRS Foundation is expected to take over the monitoring of the progress on companies’ climate-related disclosures from the TCFD. Several more exciting reporting shifts as shared by David Carlin https://www.linkedin.com/in/david-carlin7?utm_source=share&utm_campaign=share_via&utm_content=profile&utm_medium=ios_app

     

     2024 is another mid way mark to reaching the Sustainable Development Goals #SDGs by 2030 set in 2015

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   3. More Funding…and implementation

   • At COP28 the Loss and Damage Fund was agreed to be operationalized. it is expected to provide financial assistance to the countries most vulnerable to the impacts of climate change. Unveiled in 2022, the fund attracted nearly $300 million in pledges at COP28. There’s no obvious steps to how this LDF would be implemented. how will funds be distributed, and for monitoring

   • A Climate Adaptation Fund reflects a global commitment to addressing the impacts of climate change. Expect increased focus and investments in projects aimed at adapting to the changing climate. As another bucket of funding - does this replace the initial $100 Billion climate fund launched in 2021 at COP26?

   

   4. COP 29 in Azerbaijan:

   • Eyes turn to Azerbaijan as it hosts COP 29, as nations continue the momentum gained at COP28. The decision to host the conference in Azerbaijan has already met criticism from climate activists, who argue that the country’s heavy reliance on fossil fuels and its human rights record make it an unsuitable host. This could be a repeat of the script from Dubai, looking to see how the UNFCCC handles this journey in Baku.

   5. EU Gas Storage Outlook and African Suppliers:

   • Last year we unveiled Insights into the outlook for gas storage in the EU, with a particular focus on the role of African states as gas suppliers. African countries are dusting seats to take stage as major gas exporters but increased and aggressive infrastructure development could changes the energy landscape for Europe and Africa despite significant geopolitical and economic implications. Colder winters ahead for sure, but Gas-rich countries have a lot to finance and navigate towards Europe.

   6. Hydrogen Development and Export Compliance:

   • The hydrogen sector sees a ~14% surge in offtake Agreements (BNF), but attention this year could shift to compliance requirements for hydrogen exports and the implementation of cross-border adjustment mechanisms (CBAM). EU and the UK have launched carbon leakage strategies.

   • The UK introduced its CBAM just ahead of the holidays. Can expect more countries to protect local hydrogen supply and take advantage of carbon pricing mechanism. China also shared an update to its national carbon regulation. I will be covering the evolving landscape with Hydrogen compliance and export criteria in courses like one with World Hydrogen Leaders on January 29th 2024.

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   7. Nuclear Energy Dynamics:

   • 2024 could be filled with exploring the challenges and benefits of nuclear energy as some countries dismantle nuclear facilities while others integrate nuclear generation into their energy mix. Social and geopolitical implications are expected with the nuanced considerations surrounding this contentious energy source. I also just found out Greta is pro-nuclear. who would have thought.

   8. Innovative Low Carbon Technology for transport, and more Climate Funds:

   • In 2023, we witness a milestone in sustainable aviation as Virgin conducts the world's first transatlantic flight powered by Sustainable Aviation Fuel (SAF). Funding for low carbon and SAF fuels leap towards more eco-friendly air travel and could set a precedent for the aviation industry.

   • Expecting new technology and funding for climate technology; EchoVC, a Africa Capital firm announced a call for applications for a $2.5M Pre-Seed Climate, Energy & Sustainability Pilot Fund, Eco Pilot Fund I.

   9. Angola's Withdrawal from OPEC:

   • This came as a shock, but no surprise as 2023 ended with Angola withdrawing from Saudi-led Oil Producing and Exporting Countries (OPEC). They claim they had no benefit after 16 years, with production reaching capped capacity. Angola is not the first country to leave the OPEC, so curious to see the potential ripple effects on other oil-producing and exporting countries, as well as the broader impact on OPEC quotas and oil dynamics affecting inflation.

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   10. Energy in Africa & Kenya and Senegal Joining the International Energy Agency (IEA):

   • Kenya and Senegal's inclusion in the International Energy Agency joining Morocco and South Africa as an Association country signals a broader and collaborative effort in addressing governance in energy challenges in Africa.

   • additions to BRICS also could be interesting to unveil this year and what this considers for climate action and international energy trade.

I certainly had a longer list, but top general points sounds good enough. Some other things I’d be interested in is seeing how Supply Chain disruptions affect energy solutions and delivery. I have a thread here on X on how wind farms face major hold ups or cancellations due to failed supply. Then, the elections - over 70 countries are expected to be changing governments in 2023. Their responses to climate action, or for those fossil dependent economics their reaction to ‘phase out’ of fossil fuels.

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Are you looking forward to any 2023 headlines in 2024?
Let me know in the comments.

Wishing us all a great 2024!

Follow me on Instagram and X @TheCarbonBuddy

Till next time,
Oghosa

Not forgetting Methane...

The IPCC 2022 report paints a stark picture: #Methane levels have soared to unprecedented levels, far exceeding the emission limits set by the Paris Agreement to keep global warming in check at 1.5°C.

Abating methane emissions is one of the most immediate and effective strategies to curb the pace of climate change. However, to make meaningful progress, we urgently need accurate, source-level methane emissions data from countries and industries worldwide.

At COP 26 in 2021, a #GlobalMethanePledge was entered by 150 countries which represent nearly 50% of global anthropogenic methane emissions and over two-thirds of global GDP.

Between then and now...well just through this week alone, we've seen major announcements concerning Methane action plans

1. November 14th: #US and #China will initiate technical working group cooperation on policy dialogue, technical solutions exchanges, and capacity building, building on their respective national #methane action plans to develop their respective methane reduction actions/targets for inclusion in their 2035 NDCs and support each country’s methane reduction/control progress. https://www.state.gov/sunnylands-statement-on-enhancing-cooperation-to-address-the-climate-crisis/

2. November 15th: The #EU Commission welcomed a law to curb methane emissions in the EU and for imports. One thing that stood out from this publication is that by 2027, the Regulation will require that new import contracts for oil, gas and coal can be only concluded if the same monitoring, reporting and verification obligations are applied by exporters as for EU producers. The Regulation will set out a methane intensity methodology and maximum levels to be met for new contracts for oil, gas and coal. https://ec.europa.eu/commission/presscorner/detail/en/IP_23_5776

If you're familiar with CBAM*, I'd assume this law will at some point play a role in extending the list of CBAM-regulated imported goods.

At COP27 last year, the EU, together with the United States, Japan, Canada, Norway, Singapore and the United Kingdom adopted a Joint Declaration from Energy Importers and Exporters on Reducing Greenhouse Gas Emissions from Fossil Fuels, committing to take rapid action in reducing methane emissions.

A common factor is that these laws etc want to have some level of methodology to account for methane or at least track for transparency. Methodologies can be very effective in tackling industries and methane control. Also, transparency as we know allows for effective change. while the NDCs are sharp in countries accounting for their reductions. Methane figures could ignite a ‘shame and blame’ retraction.

Everyone should have access to data and be aware of and monitor emissions that could make or slow down prosperity for all. ICYMI, climate change.

Now, In 2 weeks at #COP28, Greenhouse Gases, Carbon Intensity and Hydrogen will pull a lot of conversations along the pathway to decarbonization...of the manner, things the three have in common - the short-lived climate pollutant that accounts for about half of the net rise in global average temperature since the pre-industrial era should not be forgotten.

Till next time,

Oghosa

By 2030, UN member states: 193 countries have to meet the Sustainable Development Goals (SDGs) - all 17 ‘Goals’.

Since 2015, the United Nations has crafted missions around these Goals to ensure a fair and equitable quality of life for all of mankind. Although the Goals are voluntary in nature, national governments have the responsibility to commit to leveraging the universal Goals: through the anecdote of ‘leaving no one behind’.

In 2023, almost every country has some aspects of a pathway defined towards reducing their emissions and decarbonizing with the goal of reaching net zero (or your equivalent word for a low-emission world ). The world might be failing off track between coordination structures, funding, stakeholder commitments and the speed of the climate crisis.

But much like any other target set by governments, businesses or our own New Year goals - targets are met when there is system thinking behind them.

Understanding how every aspect of the Hydrogen Economy can positively support the advancement of each Goal encourages system thinking. So then, what happens when the Hydrogen Economy and the SDGs walk into a room?

Okay, but what is the Hydrogen Economy?

The global buzz around Hydrogen in the last few years has been unprecedented but timely. For many, hydrogen makes up a good portion of our vocabulary. For anyone else - in this 2021 post on Why Hydrogen in Africa you get a gist of why hydrogen is described as a “silver lining” for decarbonization but not a pancreas.

While hydrogen is very attractive as a potential feedstock, energy carrier and storage medium, it also offers alternatives for reducing agents in hard-to-abate sectors which cannot be easily electrified: consider replacing coke in iron production or locomotive enablers (like fuel cell electric vehicles).

Several countries looking to decarbonize industries towards meeting their climate aspirations largely need to prioritize the Goals.  Actively engaging the hydrogen market to gain an equilibrium with sustainability requires awareness, participation and proactiveness by all stakeholders.

So, for hydrogen to be truly sustainable whilst meeting the challenge of global decarbonization. Recognizing spectrums of global commitments like the United Nations Sustainable Development Goals is necessary. These Goals are recognized across all aspects of sustainability and development and a hydrogen economy welcomes an opportunity to effect.

17 United Nations SDGs with 169 indicators

Innovation for the hydrogen market with systems thinking can reflect the Goals to bring a grasp of interconnectedness into aspects of technology, policy, and economic activity.

Meeting the Universal Sustainable Development Goals through Green Hydrogen

While the below stimulations for the respective Goals are brief and not exhaustive - They should signal deliberations as stakeholders navigate the hydrogen market.

• GOAL 1, 2 and 3: No Poverty, Zero Hunger and Good Health and Well-being

  Decarbonizing our activities enhances the quality of air, water, and food. Therefore, significantly reducing emissions during production and application of clean hydrogen applications limits the spread of pollutants in the atmosphere. The use of Green hydrogen via fuel cells emits water vapor replacing the pollutants from fossil-fueled heavy-duty operations and significantly reducing pollution. Good health promotes better well-being, as does healthy crops ( and farming applications) reduce hunger and poverty.

• GOAL 4: Quality Education

  Hydrogen projects require an extensive pipeline of operations. The Energy Transition expects an increase in the labour market. For the most part activities for hydrogen production are expected to occur in rural or low economic regions. To match the demand for skills in these regions quality education is usually inaccessible – as part of Corporate Social Responsibility which generally needs more colloquy; hydrogen development can consider ensuring access to quality technical vocational and tertiary education, including university programmes. This presents an opportunity to leverage local content too.

• GOAL 5 and Goal 10: Gender Equality and Reduced Inequality

  The UN SDGs set measures to end discrimination against women and girls everywhere. The targets within this goal encourage close engagement for women’s full and effective participation and equal opportunities for leadership at all levels of decision-making. To mitigate this, communities like the Women in Hydrogen, the Women in Green Hydrogen (WiGH) Network and several others have made remarkable strides towards increasing the participation of women in green hydrogen. According to the WiGH network, women have occupied only 1/5^th of speaking engagements and when compared to transitional energy sectors, the numbers remain lower. Diversity of genders also enhances productivity and promotes a healthier and safer workplace.

• GOAL 6: Clean Water and Sanitation

  Surprisingly, hydrogen production by 2050 is going to be one of the lowest demands of water. I reflect by answering if Hydrogen is a threat to water security. To produce green hydrogen water is split over renewable energy. This water is usually in its purest form and encourages desalination processes within hydrogen production facility regions or direct access to fresh water. Water scarcity continues to be a significant concern for many regions with Day Zero in South Africa and the emerging crisis in India. The hydrogen economy also contributes to improving water quality as water used in the hydrogen process is re-purposed.

• GOAL 7 and Goal 13: Affordable and Clean Energy (and Climate Action)

  The target set is to ensure by 2030, there is universal access to affordable, reliable, and modern energy services. This includes increasing the share of renewable energy in the global energy mix. Hydrogen here acts as a catalyst in speeding up renewable energy ramp-up. Low carbon hydrogen can be used for long-term storage through its vectors like in fertilizers etc. Although hydrogen for power generation is considered as a long-term prospect; its optimization for clean energy is a great addition to environmental measures but is also an opportunity to develop domestic supply chains. Alongside this, the increase in Research and Development in the sector is also expected to rise as investments in hydrogen increase. The ramp-up of renewable energy provides an avenue for serving the unserved and underserved communities in rural areas, through mini-grids and other decentralized energy systems.

• GOAL 8: Decent Work and Economic Growth

  The workforce for a low-carbon future and the energy transition is enormous, and the hydrogen economy is a fraction. Investments in the hydrogen economy through scaling of clean energy create development in economies and skilled jobs for decent work. An entire supply chain is relevant for enhancing the commercial scale of production by 2030. This said countries have an opportunity to transform their leadership, technological skills, and cross-cutting jobs. Skills for the hydrogen economy have been championed as transferrable; meaning relevant energy management roles can be upskilled and prepared for hydrogen. More task force employed by the low-carbon economy improves the economic growth within nations and regions. There are agreeable collations with increased workforce and economic growth and capturing Goals 1 and 2 (No Poverty and Zero Hunger).

• GOAL 9 and 11: Industry, Innovation, and Infrastructure (and Sustainable Cities and Communities)

  The reality of infrastructure for the hydrogen Industry takes spins on Innovation, technology integration and generation. Alongside, zero-emission vehicles are speeding up with city-focused policies being encouraged across cities. Most recently, the United Kingdom introduced the London's Ultra Low Emission Zone. Across Europe, and now the Middle East and Asia there is an increased number of installed Hydrogen Refueling Stations (HRS) and browse Europe’s Availability Map (h2-map.eu). HRS are increasing with close to 729 in 2021. The replacement of depletable energy resources with renewables in municipal functions, and transportation benefits from the urgent need to decarbonize.

• GOAL 12: Responsible Consumption and Production

  The hydrogen economy can be associated with the circularity of low-carbon systems. For circularity, excess generated renewable energy can be stored long term with hydrogen, the water from electrolysis can be re-used and skills from other energy phrases can be optimized to match demand.

• GOAL 14: Life Below Water

  The maritime industry accounts for close to 2.2% of global CO2 emissions, and the International Maritime Organization aims to achieve a 40% reduction by the infamous 2030. Reducing sea pollution is a priority for a healthy life below water. Conventional fossil fuels vessels particulate matter and sulfur dioxide during combustion. Low-carbon hydrogen as a fuel for maritime is a zero-carbon emission that also protects maritime and coastal ecosystems. But for the shipping industry to successfully decarbonize and protect life below water; major retrofitting of shipping vessels occurs. Reaching this ambition requires ocean freight carriers to maximize energy efficiency through operational and technical measures and upscale zero-carbon fuels.

• GOAL 15: Life on Land

  The development of hydrogen projects brings environmental, social and governance impacts (e.g., biodiversity, land use etc.). Low-carbon hydrogen production will require important land available for renewable energy production, which is needed for electrification. Renewable projects have also been frowned upon for taking up prime farmland or displacing communities. The hydrogen economy has an opportunity to garner lessons from initial renewable projects and only place production facilities on land that has been willingly given by communities, and not affecting biodiversity or soil conversion.

GOAL 16 and Goal 17: Partnerships to achieve the Goal and Peace and Justice Strong Institutions

Towards the next energy transition – sustainable partnerships led by system thinking will include technology sharing. Technology sharing is established where countries with significant research and development capacities share and transfer findings towards accelerating progress. For the hydrogen economy to be effective, there must be an establishment for trade, research and an intra-region supply chain. The benefit allows for Global South countries who are ready to explore their advantage in the hydrogen economy built on existing research and findings which speeds up development in the long run.

The Hydrogen Economy, and SDGs …in the Room

For many countries, linking trade and climate is the only way to ensure projects and hydrogen generated observe the Goals. The European Union through the Carbon Border Adjustment Mechanism (CBAM). The CBAM proposes to charge a fee at the entry to the Union states on carbon-intensive goods. This is expected countries exporting to Europe will speed up decarbonization efforts by utilizing hydrogen vectors.

Likewise, countries like Chile signified sustainable development for the industry through their requirements for the production and export of green-sustainable hydrogen…It expresses sustainability certification of hydrogen and derivatives to observe the Goals notably affordable clean energy (7) and climate action (13), but also SDGs 8, 9, 10, 12 and 14.

Inserting the relevant Goals as a guiding principle for hydrogen policies allows us to acknowledge measures that hydrogen benefits are important to ensure no one is left behind through system thinking towards a low-carbon and sustainable future.

How far has your country taken the Goals into consideration?

To be mused again,
Oghosa

I visited South Africa a few weeks ago and a major take-back (well I knew about this prior to visiting, wrote on SA loadshedding here)…well the major take-back was when it got to mins pass 8pm, the entire municipality of Cape Town went pitch black. At some point, all you could see were the lucky houses who had invested in solar systems before the load shedding crunch down or had enough buck to purchase solar as the city faced an energy crisis joining the other millions of Africa’s without reliable electricity.

Here’s where the case in South Africa might be different to Nigeria’s - South Africans all knew what the problem was and they understood it (well the technical aspects). Eskom, the electricity operator if you like - attempts to be as transparent as possible by providing city focused mobile applications that keep citizens aware of a black out any time, every single day. So at 8pm as we drove through The Mother City - Cape Town and I noticed the city felt darker than previous nights; my SA resident buddies knew what time it was - Loadshedding.

My dad tells me at some time, Nigerians had this ‘prompt’ well it was more of a notice - it went off on the radios and sometimes national news ( was it just on NTA? if you know better leave me a comment please) and it would say something along the lines of ‘between this time and this time, there will be no power supply for this and that reason…’ (I wonder if they apologized for the power shortage..) Anyways, Nigeria once had that notice, it wasn’t an app like what they’ve got in South Africa but it reached those who had to know - households will not have electricity.

It’s now 2023…July and I still have to ensure when I have late meetings - I either have my inverter charged on standby and or hope the power does not trip off unexpectedly living me and my screens in darkness even if for those mini seconds before the switch.

So why I do not subscribe to households using solar as primary source of electricity in any peri-/urban city in Nigeria?

1. Energy security: during the pandemic, when borders closed especially in China. Nigerians struggled to get vaccines, and solar systems. The continent at large barely manufactures enough innovative technology so much less solar systems to supply all of the 600 million African living without access to energy. So if Nigerians are going to rely on solar panels, batteries, inverter machines etc. - best we could do is manufacture them ? (oh yeah not possible, why? not enough electricity to maintain production lines…)

2. Nigeria is generating enough power, the issue is how it gets to you. As with many resources…Gas? we get am plenty. Gas - a major feedstock for electricity generation in Nigeria is richly available, and the country holds in top 10 largest gas reserves; the idea that we must have a solar company on speed-dial incase the inverter knocks up is outrageous.

3. No one is going to solve the problems if Nigerians always settle… So showing the government ‘things are okay’ we’d just ‘invest’ in solar systems is a down hill battle. And what happens to those who don’t have a quarter million to ‘invest’ in solar. The matter is complicated - ask your next Nigeria Electricity Supply Industry buddy (which is possibly me, so i’ll find time to break down what’s wrong with the grid or share digestible content)

   Power transmission has been a major problem in Nigeria- the country has persistently witnessed transmission grid collapse. In 2022, the national grid collapsed over 10 times necessitating a national blackout on every occasion. While Nigeria has a generation capacity of 22000 megawatts, the country can only transmit about 4000 to 6000 megawatts of electricity.

4. Back to the basics… when Solar began dominating the energy market they were targeted at rural or peri-urban communities. So households and facilities that in no time near would see a blink of grid supply, had the solar advantage.

5. It is not sustainable for everyday use. Charging inverters/batteries to use back to back makes the systems less durable overtime. Who has quarter million + to spend intermittently. Nigerians seem to have frivolous money for comfort. but that's not the populace. Lack of reliable electricity grid is KILLING many families across peri-urban cities alone.

6. Edit: lastly…e-waste issues. heard of e-waste before? It’s basically what happens at the end-life cycle of electronic devices. Nigeria is already one of the biggest ‘dumping grounds’ in Africa for electronic waste…then add Solar panels, inverters, batteries, connectors (which need to be replaced quite often; in 2 years I’ve changed my battery 3 x already). You should get the gist, if more people are relying on Solar systems as their primary source of electricity in 10 years - Nigeria might be clogged in e-waste not just from electronic devices but from power systems too. Especially as the global community is still figuring out what to do with at the end life for solar systems. They’re not that easy to reuse either.

I understand time evolves. And the energy transition is posed to keep promoting use of renewable energy over fossil heavy fuels like diesel generators. But truly at what cost to the customers, environment and general economic stability if Nigerians keep giving leadership pass cards by demonstrating that Nigerians are ‘coping’ by importing SHS and using them as primary sources of electricity while connected to the national grid with no national explanation for the failing electricity market design.

To be mused again,
Oghosa

The impending hydrogen economy is based on a time-old scientific process - it’s called electrolysis. This process is when an electric current is passed through a substance to effect a chemical change. For the production of Green hydrogen, with the global hydrogen demand by 2050 varying from 150 to 500 million metric tonnes per year.; electrolysis will be done by using renewable electricity to split water into hydrogen and oxygen.

Now, pure water is an intricate part of electrolysis to produce green hydrogen. It has been estimated that 9 kg of fresh water is needed per kg of hydrogen [9kgH2O/kgH2]. So this grandeur hydrogen economy will require secure, long-term access to clean water.

But so do over 2 billion people who lack access to safe drinking water and 4 billion people experiencing severe water scarcity at least one month a year–and many far more frequently than that.

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So, it’s not breaking news that several countries are facing a shortage of clean water…if you missed it. Here are some countries experiencing ‘Water Stress’… 💦

• Water Flint, Michigan, United States which recently won an award of $600 million in settlement

• South Africa’s water crisis is primarily due to climate change but It is estimated that 70 million litres of treated, clean, drinkable water is lost daily as a result of the thousands upon thousands of leaks that characterise South Africa's water piping system

• Egypt is also facing a water crisis due to climate change bringing year-long droughts across the region

• Brazil: Out of its population of 212 million people, 30 million people (14% of the population) lack access to a reliable, safely managed source of water

• Asia water shortages—both in the form of stress and scarcity—are emerging as a major social and economic threat, especially in China and India. There’s a looming water war between India and Pakistan.

If this wasn’t scary enough, PepsiCo’s CSO comments that ‘Half of the world’s population will face water scarcity as soon as 2025. It’s time everyone does their part in addressing the global water crisis'

So when there is a scarcity of it in the world; why should we be interested in an energy carrier production that uses clean water?

Many Hydrogen observers have shared concerns about the hydrogen economy increasing the already existing water stress, but Hydrogen weighs the H20 supply just by a minimum compared to other demands…Read my post on ‘Why Hydrogen in Africa ?’

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If green hydrogen production is not the biggest threat to water security, then what is?

1. Agriculture: is one of the biggest sources of water contamination, with fertilizers, animal waste and pesticides washed into waterways by rain.

2. Industrial use: the demand for consumption is bringing about more fabricating, processing, washing, diluting, cooling, or transporting of many products. Towards global industrialization, the need for building materials - water is used in the production of cement, aggregates and ready-mix concrete, washing gravel and sand. There’s also the oil and gas industry that consumes water that is used to drill and hydraulically fracture (“frack”) wells, refine and process. Feed water is used in boilers and cooling towers to ensure efficiency, maximise boiler and system life, and reduce maintenance costs.

3. Wastewater municipal

   

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How Hydrogen Could support re-vitalizing Water stress?

Nations within the Sub-Saharan Africa region with water stress have put in place state-of-the-art desalination facilities to take away mineral components from saline water to fresh water. This existing know-how fills the gap for technological advancement in countries like Namibia (the first green hydrogen production plant), so rather than taking the clean water available, there is the refining of saline water for hydrogen production. The process is known as desalination and has been used for decades since humans cannot drink saline (sea salt) water. According to the International Desalination Association, globally, more than 300 million people receive their water from desalination plants.

There are also other water purification methods like reverse osmosis whereby water containing dissolved salt molecules, is forced through a filter, in which the larger salt molecules do not get through the membrane holes but the smaller water molecules do. 

Water Desalination requires high energy consumption to operate, and technology is also subsequently costly. The highest demand for desalinated water is in the Middle East, which uses about 70% of the worldwide capacity of the technology, building towards a role in the hydrogen economy)

Recognizing Hydrogen Economy is not the biggest threat to water

The main priority for many nations is finding technology and nature-based solutions to reduce the limitations to access to water. So no, Hydrogen is not going to swap up the water supply…it could even be a catalyst for water purification in certain regions.

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🎊 Happy World Water Day 2023! #UN2023waterconference 💦

READ MORE: See how innovation is used to improve access to clean water.

World Water Day | World Water Day 2023

Spotlight Reads

• How Lack of Copper Could Slow the Energy Transition

• Can Developing Economies Have High Growth Without Using Coal? A Debate.

• African countries are warming up to carbon trade

• How can companies recycle wind turbine blades?

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Did this newsletter miss anything? or just want to say Hi? Comment or connect with me, I’d love to hear from you 💥

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Oghosa

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This week, we’re addressing a reality for many Africans for decades and for South Africans for the last 200+ days. While access to energy remains one of the biggest challenges for Sub-Saharan Africa; countries like South Africa have been praised for reliable access to electricity for years!

We’re discussing this over the next few days on Clubhouse, join the room, click below

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Let’s get into it…

So what happened to South Africa’s electricity?

For many years, South Africa has been praised as the prime spot of the Sub-Saharan African nations. The culture, its cities, the nightlife and…the reliable electricity.

Over the decades South Africa has managed to keep the records. Even to the extent of exporting electricity to neighbouring counties; Mozambique, Lesotho, Swaziland, Namibia, and Botswana.

The story gets dimmed with notice of frequent load shedding and South African president Cyril Ramaphosa officially declaring the country's energy crisis a nation-state of disaster.

The main supplier, Eskom, of electrical energy generates nearly half of the electricity used on the continent. So, here’s what happened to South Africa’s electricity.

What is Eskom ?

Eskom, founded in 1923, is the South African electricity public utility, an electricity monopoly producing and distribution.  Eskom has successfully provided South Africa with electricity relatively reliable and in the grand scheme of economics, affordable. Eskom has now declared additional loadshedding stages; stage 4 means South Africa’s will be scheduled for load shedding 12 times over a 4 day period for 2 hours at a time, or 12 times over an 8 day period for 4 hours at a time.

Load shedding has always been part of the lives of South African residents and businesses since 2007.

The difference this time ?

At Stage 4, many electricity customers are dreading the possiblites ahead with the rising electricity demand. Load shedding is when the total grid capacity is reduced following increased demand to present a grid collapse. South Africa is drastically increasing in population (estimated at 62 million in 2023), and so is the demand for electricity.

The idea of load-shedding as South Africans know it includes planning to roll blackouts based on rotating electricity schedules. but this time Eskom shrunk its operating capacity from 45,000MW to 25,000MW – which when considered is still largely incomparable to the generated capacity of 11,165MW by Nigeria for its 200 million+ population.

Few things that lead to Load Shedding in any country…

• Breakdowns or poor maintenance of generating power plants

• Failure to upgrade the electricity supply network, especially with more connections to the grid

• Questionable criminality

• Slow integration of Renewable

• Financial and liquidity crisis

Poor access to electricity also comes with economic downhauls of millions of dollars.

Anyways, back to Eskom… President Ramaphosa is determined to close the energy gap by procuring emergency power (and systems) within the next six months (increasing the grid capacity in 18 months and beyond the president assured South Africans).

President Ramaphosa also introduced a dedicated Ministry of Electricity and expecting a new board management and the creation of a separate transmission company.

However, for many solar panels and diesel generator distributors business is booming. In 2022 alone 1,650MW were registered while years before private energy projects were challenged with restrictions and limitations.

But all in, it is hard to be certain there might be light at the end of this tunnel for South African residents – Africa might just as well be a country.

What do you think about the recent Load shedding?

Carbon Buddy: the situation for adequate reporting of blackouts could help residents mitigate electricity access unlike in Nigeria where the electricity supply can be very sporadic.

Spotlight Reads

• How Lack of Copper Could Slow the Energy Transition

• Can Developing Economies Have High Growth Without Using Coal? A Debate.

• African countries are warming up to carbon trade

• How can companies recycle wind turbine blades?

#Ads

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And that’s all for this week!

Did this newsletter miss anything? or just want to say Hi? Comment or connect with me, I’d love to hear from you 💥

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Over the last week, the BET star might be taking the hype or hope a bit extreme as he shared his plans to develop a new hydrogen technology in Uganda. Terrance Howard, a Hollywood star with decades of screen time and a questionable background in chemistry, shared his plans to turn Uganda into a center stage for technology with hydrogen.

Terrance goes on to introduce this geometric of hydrogen - did he mean the Geometrical representation of the hydrogen atom? If so, how are his Lynchpins behave as a swarm, as a colony, that can defend a nation going to help Uganda defeat (some unknown conflicts), also remove plastic from the ocean, and then harvest food?

Hydrogen is not a silver bullet - as many within the energy industry are coming to realize. So while Terrance hopes to save Uganda from itself with Hydrogen atoms and an object he held closely (assume a Lynchpin of some sort) throughout his ‘world changing’ speech…lets see some actual possibilities for Hydrogen.

Hydrogen is literally everywhere

Hydrogen can be produced from a variety of domestic resources, such as natural gas, nuclear power, biomass, and renewable power like solar and wind..and water! You know H20; two hydrogen atoms and one oxygen atom.

Hydrogen is a premium product.

Hydrogen has been identified since 1650, when Théodore de Mayerne first poured dilute sulfuric acid on iron to produce a gas of “inflammable air”. Then Jaques Charles in 1783 made a hydrogen balloon large enough to carry him and a colleague over a distance of 36 km at a height of up to 550m. In more recent times, well not really but 1910 the Haber process created ammonia. Ammonia is a key input for fertilizer production used primarily in the agriculture sector.

Besides keeping us hydrated and for farming - Hydrogen is also heavily used in several manufacturing processes. For example to remove sulfur from natural gas and from refined petroleum products, such as gasoline or petrol, jet fuel, kerosene, diesel fuel, and PMS.

Terrance was not wrong, hydrogen has taken center stage with its several possbilities. Clean hydrogen has also been classified as key for low carbon processes to decarbonization for the aviation industry; but according to Terrance his invented new form of flight will also replace drones, helicopters and the planes.

He’s also not wrong that African countries like Uganda have an opportunity to use hydrogen to assist economic development; with the clean hydrogen market potentially reaching roughly €10 trillion in 2050.

As the world races to reach net zero, there is a need for cleaner processes - and hydrogen can solve that too. Countries like Namibia, have in fact taken bold steps towards creating a hydrogen future.

While this video clip was amusing to watch; it also gave a little sense of saviour-master-ship and ultimately the risk of misinformation for possibilities that can protect our planet. Mr Howard is obviously certain his form of flight is set to change the world. All he needs for the people of Uganda an opportunity to spread this and sell these products throughout the world, is fertile land to develop…

Until next time,

Oghosa

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Recently, a business leader shared a post of a green project from a mangrove restoration - it was applauded quickly and the likes doubled by the thousands in a few hours. I too having quickly graced this before and after image shared a celebratory fit. Considered why and how other regions could take up a leaf from this book, and what other restoration projects could learn from this. A few comments between the accolades, attention possibly drew on the fact that the terrain in the before photo did not in fact match what was in the after - had someone moved the lake, did the drone capture the image from a reverse angle? The edited post included:

“18/6 point of clarification: in response to several comments questioning the vantage point and location of the 2 images, I have been informed that whilst both images were taken at Eden Reforestation's mangrove planting sites in Madagascar, they are not the exact same site, but accurately represent the land at the start of the planting project (2007) and reforestation achieved by their work (2022). Apologies if this was misleading, it was not my intention. It doesn't diminish the importance of global reforestation and it's been incredible to see such a positive response! We can do this”

Whilst this is commendable on the train to carbon neutrality and forestation; it seems we might be entering a green loop of instant gratification vis-à-vis green washing. Green washing, as Hilary Meltzer, chief of the Environmental Law Division of the New York City Law Department perfectly puts it

“When fossil fuel companies run ads telling New York City consumers and residents about their commitment to clean energy, but then tell their investors that they plan to substantially increase fossil fuel production over 10, 20, or 30 years, that’s greenwashing”

It is also green washing when businesses introduce projects with falsified and exaggerated figures images to over compensate for process and or impact in order to meet benchmarks. Business as usual in the back, but eco conscious in the front - we do not want none of that.

Interestingly Eco-Bot.Net, an AI system built to expose climate change disinformation and corporate greenwashing on social media, especially during COP26. Dealing with critics social media cooperation like Facebook introduced Climate Science Information Center for fact checking content around climate change. Misinformation about climate goals or eco friendly achievement will not be slowing down as many businesses understand the science of social media and increasing the budget for promotion and ads alike.

In the renowned S&P 500 ESG Index, after joining in 2020 Telsa was dropped as part of an annual update. Electric vehicle maker which has tagged as low carbon options for private transport but also according to Forbes the company ranks well behind General Motors and Ford in reporting carbon emissions and setting carbon-reduction targets and that do not disclose their overall greenhouse-gas emissions. Well social media clogged to the boot off the ESG Index; because Telsa, the electric vehicle making company failed due to a lack of low- carbon strategy and “codes of business conduct,” along with racism and poor working conditions reported at Tesla’s factory. Green washing victims have gone beyond booted off social and environment indexes; with leading fossil fuel companies having their day(s) in court from essentially how they have promoted their “green” activities.

As the standards towards protecting our planet for generations ahead go higher; we also expect to see more buzz words like green, climate, net-zero…circle social media platforms amongst investors, business owners, 9-5ers and young professions; especially at a time when the idea of ‘show it or it did not happen’ fuels social media.

Wonder where we’d be when social media and eco commitments are at an all time high alongside the intense purge for instant gratification.

PS. * I am in no way questioning the authenticity of the post, image or project but recommend in this age of digital awareness and need for stronger transparency - closer attention is paid to represent actualities especially around eco emotional troops like restoration.

till next time,

Oghosa

The law of energy conservation: “Energy cannot be created or destroyed, it can be converted from one form to another but the total energy within the domain remains fixed”

For example, renewable energy such as solar and wind which can easily be generated in large quantities can be stored as hydrogen and then used for needs like methane, synthesis gas, liquid fuels, or chemicals production.

All good news? Surely.

Although hydrogen dioxide (H20) is ‘everywhere’ and the main constituent of Earth's hydrosphere - clean consumable water can be hard to source. For the production of hydrogen, it is estimated that the minimum water electrolysis can consume is about 9 kg of fresh water per kg of hydrogen [9kgH2O/kgH2]. it is predicated that Hydrogen demand by 2050 could vary from 150 to 500 million metric tonnes per year, so this 1:9 ratio is important to understand why hydrogen production will require secure, long-term access to water.

The climate neutral fuel has raised criticism especially in favour of nations with fresh water crisis joining the hydrogen market pool. In the meantime, the presumption that hydrogen will take up clean water was debunked in a recently published IRENA The Geopolitics of the Energy Transformation: The Hydrogen Factor it highlighted (see Figure 1) that across industries by 2050, the lowest estimated demand for clean water would in fact be from hydrogen production.

Africa has the most promising prospects for green hydrogen, even with a clean water crisis

With countries like Namibia boosting 300days sunshine, it is no surprise that the continent with its high solar intensity, wind and hydropower capacity is signalled to be a key player in the hydrogen economy. Though IRENA has identified agriculture as demanding a substantial amount of water over hydrogen, what’s the reality in regions rich in renewables where water security remains a challenge.

Egypt, Ethiopia and Sudan are still in turmoil over the Renaissance dam and war torn Congo’s Grand Inga Dam once completed is to be world's largest proposed hydropower scheme.

Meanwhile Southern Africa grappled with a regional water crisis due to severe droughts (intensified by climate change) has exhibited prospects to curb this crisis. Nations within the region have long established state of the art desalination facilities to take mineral components from saline water. This existing know-how fills the gap for technology advancement as countries like Namibia, now set to launch its first green hydrogen production plant in the Erongo region already has a desalisation plant2 existing.

Green Hydrogen, for Sustainable Development Goal #6: Clean Water and Sanitation

According to WHO, 1 in 3 people lack access to safe drinking water and fresh water scarcity threatens food security and nutrition for about 25% of the world population. The United Nations was not wrong in including clean water and sanitation for all as a SDG goal by 2030. The privatisation of water in countries like Zambia, South Africa and Uganda has led to water efficiency, encouraging sustainable management of water and amplifying the SDG #6 for sustainable water access for the population.

Although green hydrogen is a clean energy carrier, it is important to be realistic about the consequences of producing green hydrogen especially when considering a key component being water.

In oil producing countries, the volume of water used in the extraction of crude oil can amount up to 8 times that of the oil produced. The oil industry, depending on the oil recovery technique requires vast quantities of water. Assuming the demand for oil consumption is replaced with green hydrogen, and other low carbon fuels, the competition for water in the energy sector might neutralize. Also, as renewable energy systems like wind and solar need little to no water, the pressure for water consumption for energy could be significantly reduced.

Oil extractions were successful in building strong economies around them. However, we have seen first-hand the aftermaths of poor Corporate Social Responsibility. Exploration of crude and gas have negativity impacted host communities across the Niger Delta in Nigeria to Congo Brazzaville in DRC these regions have now become some of the poorest and conflict torn regions.

Although the future is very near for green hydrogen’s role in the journey to net zero through decarbonization, the viability of large scale commercial hydrogen projects must have secure long-term supply of water at the forefront of any investment through stringent feasibility studies.

So, renewable energy sources…check

Fresh water accessibility, check.

Corporate Social Responsibility to ensure sustainability in water low communities… we’re signally no loopholes #sustainableH2

In Nigeria, the northern region of the country has the highest solar radiation capacity. however, this region is also dry with low water supply as drought levels continue to rise across the Saharan desert. Therein, if speaking hypothetically a green hydrogen production site is located in a water poor area - generated clean water must accommodate for the communities (if applicable). It cannot be emphasised that resource rich countries in Africa have to ensure in a bid to play a key role in green hydrogen economy, see social sustainability as a key priority. A lesson learnt approach from oil spills leading to environmental pollution must be in place for sustainable hydrogen.

As the green hydrogen economy looms closer, national net zero/hydrogen strategies, project developments and feasibility studies - alongside renewable electricity access, water security must be accorded in an integrated manner for sustainability ahead of the priorities of a low carbon future.

till next time,

Oghosa

P.S: while on hydrogen and water, found something quite interesting; hydrogen molecules advertised as a revolutionary for human wellbeing to change the way we hydrate. reviews have said, it has a great taste with more hydrogen than H20. Would you try pure hydrogen water ?

While this energy transition, this move from fossil-based fuel to more sustainable energy systems is expected to erupt the energy market with new technologies – there is another sheriff in town, It’s decommissioning.

What Goes up Comes Down…

Decommissioning is simply to put out of service, of assets. The process involves clearing, where applicable filling the well, removing platforms and everything else you could imagine with a nuclear plant, oil or gas wells infrastructure. Decommissioning projects depending on the energy plant much like commission can be technical, with long decommissioning periods and where possible cash value from sale of high valued components.

Although fossil fuel plants and resource sites are closed or shut-down, for the most part, they are not at a end-of-life phase as commonly described - but rather an important part of the circular economy1 triggered by the energy transition. It’s an opportunity and possibly one that takes a significant part of the financing for infrastructure in this energy transition.  

How do you know a decommissioning project is successful?

By how purposeful the site (and components) will become – so, it’s pertinent that companies and national governments involved in relative projects are set with rules and regulations to assist this other multi-trillion-dollar economy.

The Business of Decommissioning

Decommissioning might seem to complete the ‘out with the old’ narrative, but it’s more than that. Roles within the let’s call it, the Decommissioning market have expanded over the years’ from project financing to Policy regulating, then sustainable architecture, engineering for re purposing and Surveying. There is an annual spending projected of $13 billion within the next 25 years for technical decommissioning specialists. 

In the North Sea alone, there are over 100 oil installations with roughly 10,000 km of pipeline and thousands of wells. Each one of these will eventually reach the end of their production cycle (if not accelerated by this energy transition) and will require decommissioning.

One environmental company which gave me a close insight on the potential market for decommissioning as early as 2016 was this women owned and led company based in California. Blue Latitude works to re-purposing offshore oil and gas platforms as reefs.

While this phase of decommissioning is focused on the fossil fuel project, it’s also important that the industry is mindful of the next transition. New energy, renewable energy technologies on an average have a 20 year life span, decommissioning happens next….just food for thought.

The market for decommissioning is relevant now, as it would be for decades ahead.

Till next time,

Oghosa

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Which energy source had the most traction in 2021 ? 

Last year, while everyone thought we were recovering from what had been the longest global shutdown in recent times, unaware of what was to come - In 2020, across the energy sector, one massive gloat was the unexpected yet premedicated slump in the price of crude in recent history. 

The world was experiencing a transition and so was the energy sector. To curb this transition, new fuels and technologies (mostly aimed at solving the crisis of global warming) have echoed in the sector.  So about this time in 2021,  it seemed like a good time to find out which energy source would have the most traction and possibly rub shoulders with the protagonist, crude.   

The poll on linkedin which was shared as a post featured Biomass, Wind, Hydrogen, Hydro and Gas. 

(Disclaimer: the poll was not shared in the conventional methods of ratings so it would be misleading to judge the results by the initial reactions under my post in January 2021) 

To rein in doubt of  ‘who got it right’ - I thought I’d give a brief overview of the five energy sources(and carriers). 

PS. Please bear in mind that I do not in any way claim to know every single thing that happened across the industry in the past year. Possibly some of you do, please share in the comments wherever you see this. 

Right let’s get to it then; 

Biomass 

Biomass (bioenergy which is energy made from biomass or biofuels) you’d agree is not a very popular energy source. In fact, some studies have questioned how renewable biomass works and its sustainability as a clean energy source. 

Countries like Estonia in Europe are one of the biggest exporters of biomass fuel in the form of wood pellets. Over the years, situations relating to biomass have meant the nation experienced an increase in demand. Wood pellet imports to the UK from Estonia have ballooned, these pellets bring in an increase in demand for sawdust, wood chippings, chopping of ‘weak’ trees and even land devastation in some terrains. 

Quick, back story - the demand increase is also coming from the increasing number of mainly European countries (many of which are saying bye to coal) converting coal power stations to run on biomass - but scientists warn converting coal plants to biomass could fuel the climate crisis.  

Avoidance of these claims could mean more countries shutting their doors to coal could increase the biomass demand as they made the fuel switch. 

Wind 

Before I wave through this energy source, If you haven’t seen this yet; ‘man thinks wind turbines are used to cool the earth down’ - yes you read out. You should watch this. 

I hope you did because most of this sections’ references might go over your head otherwise. 

In 2021, Texas Ranch owners were  blowing off cool oil pumps in exchange for wind turbines. Meanwhile in Mexico, the glory for wind power didn’t seem to rise to the occasion as residents experienced an increase in violence from residents desperate for money from land leases. 

Background hint, unlike the creme la creme of the renewable energy world - Solar which can be mounted almost anywhere and on anything. The rule of thumb for wind is turbines should be spaced in a 5D x 10D grid, with D = diameter of rotor. As an example, for a GE 1.6 MW turbine with an 82.5 m rotor, that gives a little over 50 acres per MW. 

That is a lotta of land! 

And land is one of the most important assets for humankind - wind as an energy source possibly has work cut out to cool things down between the increase in energy demand and ensure there’s enough land to go around,especially in smaller communities. 

Probably while they're at it - reminding people the wind blades aren’t for cooling the earth would be a plus too. 

Hydro 

Over the years, I have followed the developments between Ethiopia, Sudan and Egypt. I have written about the Water Wars here and here. 

What is expected, once completed to be the largest hydroelectric power station in Africa and seventh in the world - the Grand Ethiopia Renaissance Dam is still proving contentious 10 years later. Some spectators have questioned why three nations would  rammy over hydro when they also have some of the highest intensity for solar radiation, that’s another story. 

The IEA records that, In some countries, such as the Democratic Republic of Congo, Ethiopia, Malawi, Mozambique, Uganda, and Zambia, the share of hydropower in electricity generation exceeds 80%. 

In 2021, Increased rainfalls due to climate change have been suggested to make hydro dams vulnerable to flooding across Nigeria to Brazil. 

Despite the Dam floodings, in contrast to improving the energy mix with renewable solutions and solving the climate change crisis - a research study found that dams, if integrated in model based impact analysis, could significantly affect exposure to floods. 

Either way the waves turn, hydroelectric power stations remain some of the oldest renewable energy sources. 

Gas 

To Green or not to Green - as the world welcomed 2022, the European Commission announced to include gas to ‘green investment’ and in EU's taxonomy list line with the bloc’s bid to decarbonize its economy. This decision has the potential of jeopardizing climate plans, but it is one we expect to see unfold with heavy anticipation. 

The welcome of gas as a Green investment could be a welcomed development for Gas producing countries. In 2021, African gas projects experienced traction - Nigeria’s Decade of Gas to Equatorial Guinea’s minister of energy has set out a number of plans including the resumption of work on an abandoned floating LNG to Mozambique LNG project. 

Norway, according to the Norwegian Petroleum Directorate 2021 had been a “great year” recording high revenues in gas production (and exploration) for oil and gas. Norway is being tagged as a paradox with the desire to lead the green energy shift despite these rocketing activities.  

While many countries enriched with gas have plans to develop gas projects at different scales, the sector might still have to sit on edge in anticipation for the further deliberation on just how far gas will go green.  

Hydrogen 

And finally, the Hype or Hope fuel towards the decarbonization journey.

It’s 2030 and a group of energy passiondos  as we’re often described have taken readers to what a future with hydrogen will look like. For me, I took a dive into what is currently being hailed for its hydrogen prospects, I like to call it - the Energy Port of Africa, Namibia. 

For context, by 2030, IEA estimates that the hydrogen use has to reach 212 million MT for net zero target. This hydrogen needs to be produced somehow right, there is even a hydrogen rainbow to show how diverse this most abundant energy carrier can be. 

Despite the excitement from electrolysers to interesting carbon storage mechanisms - it is important to restate that Hydrogen is not here to solve the electrification crisis - it is necessary for high to hard-to-abate sectors.  

As the technologies develop in 2022 - nations announcing national strategies to include hydrogen (which has been in industrial use for years prior) in the energy mix are probably going to be some of the exciting tales this year. 

Well here we go again, another year of not knowing where the market is really going but less anxious with possibly less uncertainty in 2022.  Who knows, the emergence of biohydrogen might be ready to take centre stage.

Till next time,

Oghosa

Thank you for opening this newsletter this week. Happy New Year too! I’m starting 2022 less anxious than I’ve been in recent years. It feels nice, I feel good - I hope you do too.

here are things that you should know in this week

• ‘We need more innovation’: Just Eat unpacks its sustainability strategy - Packaging Europe - Just Eat Takeaway.com have already taken several positive steps to drive a change across our network – from removing single-use plastics from our restaurant webshops and pioneering the use of plastic alternatives like seaweed and reusable food boxes which use up to 50% less CO2 than plastic-coated boxes and are fully recyclable. 

• Hydrogen is not an all-purpose miracle that solves everything at once. It is far too expensive and cumbersome to produce for that and in most cases, it is cheaper and more sensible to use ordinary electricity…10 Things You Need To Know About Hydrogen

• One of the largest green hydrogen projects in the world....The 2GW electrolysis plant at NEOM in Saudi Arabia is to produce hydrogen for carbon-free ammonia for export. Engineering and procurement activities have been initiated, and the start of production is scheduled for 2026.

• Electricity and energy are not the same thing, Electricity is just one form of energy. Electricity is roughly one third of the total energy consumption. The other big forms of energy consumption in addition to oil products is heating, cooling and steam generation

• Wood pellets are sold as a clean alternative to coal- but is the subsidised bioenergy boom accelerating the climate crisis? Across Estonia, between 2001 and 2019, Natura 2000 areas lost more than 15,000 hectares (37,000 acres) of forest cover, an area more than twice the size of Manhattan.

Podcast of the week: ESG Investing: A force for good or blah blah blah?

• Ed Sheeran and Coldplay taking music stages sustainable: Coldplay's next world tour will be net-zero and Ed Sheeran is planting more trees to off-set carbon emissions.

• The best way to make up for a year without trips? Commit to exploring travel responsibly— 12 ways to travel sustainably in the new year.

• Cement-Based Batteries could solve the energy storage problem, turning buildings into giant energy storage facilities

Did any of the stories interest you and you’d like to have a conversation or explore the possibilities. Let me know. If you also have a highlight worth sharing drop me a comment.

Thank you!

till next week,

Oghosa

#TouchingHydrogenFuture – tour across the globe in Jules’ Verne style Short series of stories, written by a group of Hydrogen passionados. 

Author: Oghosa Erhahon 
Editors: Erik Rakhou and Rosa Puentes Fernández.
Originally published

Namibia – The Energy Port of Africa

‘Welcome to the Energy Port of Africa’ - a bold billboard read as we drove into the city from Hosea Kutako International Airport. Aina originally from Namibia but a trained and experienced communication strategist in Europe remarked how impeccable it was that in 10 years Namibia was at the center stage for the whole world.

Unlike the last time she was in the country when the diamond markets took the nation's attention. Aina and I had met in Europe a few months ago, at an energy congress. I shared that I had been living in Windeok since the completion of the first ever green hydrogen production plant in Southern Africa in 2025.

The weather is cold in July across Namibia, Aina coming from the subtle European summer had to remind herself of the coat she had in her backpack. We boarded the newly built Fuel cell train1 to Luderitz right by the coast of the country - the once sleepy seaside town which was now a buzzing city.

Aina: I almost forgot Namibia experienced winter and summer at opposite times as Europe and North America. How do experts and foreigners cope when they first arrive ?

Me: I think most of them actually do not mind it. On average for the next few ‘winter’ months, the average minimum temperature is around 7°C/45°F but can fall to below freezing at night in the deserts and higher areas. This lasts between the months of July and August. Although it’s hard to predict the climate after all these years.

Aina: Some things never stay the same do they - Well, after the last elections, I was very concerned about the turnout of investors in Namibia. How does an African country important to the energy transition not drift with a change in government?

Me: Namibia has one of the strongest governments in Africa, regardless of changes in government. The powerhouse remains committed to the economic and development interest of the nation. The Harambee Prosperity Plan II which was introduced by H.E. Dr Hage G. Geingob reached fruition, and the politics never got in the way of where Namibia could potentially get to.

Aina: I have heard a lot about the Harambee Prosperity Plan, but could you in a nutshell explain what it was about?

Me: The Harambee Prosperity Plan II2 was introduced in 2021 to maximize the national benefits. It was a published document that included pathways towards building the now, Namibia’s Hydrogen Sector. (I quickly pulled my phone to show Aina photo of the pilot project in Lüderitz)

Me (continued): These activities meant financing - The vision saw that hydrogen development would include green, blue, transition bonds and carbon credits as innovative financing tools. Since then, three other banks including Bank Windhoek3 have become commercial banks part of the Nasdaq Sustainable Bond Network.

Through Namibia's government support, the HPP II has been impeccable through developing key activities, to engaging advisory for the strategy plan as well as putting in the right regulatory framework and enabling environment.

Aina: How did Namibia possibly secure the largest projects for hydrogen in Africa, with the sand dunes and the nation known for the least amount of rainfall in Sub-Saharan Africa - Green Hydrogen requires a significant amount of water.

Me: Well, this one is quite interesting. The nation where the ocean meets the dunes shares borders with Zambia and Angola to the north, Botswana to the east and South Africa to the south and east and the Atlantic Ocean on its west border. Namibians boost about 300 days of sunshine per year - reliable solar energy and increased capacity for wind farms.

This ‘Land of the Brave’ as the nation is often referred to - developed a deep-water port through PPP models This was used as a benchmark for so many water port development and financing across the region.  There have also been new water authorities set up across communities - Green hydrogen process involving electrolysis has improved the water situation in rural areas through introduced seawater desalination techniques.

The initial green hydrogen production pilot projects received €40 million in funding, worth $45.3 million, from Germany used on feasibility studies4.

The evening train got busy with chats about the elections and distant speakers playing music by the national icon, King Elegant.

Aina had picked up reading material at the airport and between the transit. The following day – she had made a few other observations on the economic and energy situation in the country.

Namibia, the Energy Port of Africa’ is no longer dependent on imports for electricity but on a pathway to be the first African nation to electrify 100% of its communities and cities, with 100% renewable energy. 

Aina: It makes a lot more sense now, the traffic jams, busy trains and booked out hotels in the city…the population increased. Did you know according to the UN, Namibia was 2.5million people in 2020, now there are over 500,000 people working across the Hydrogen supply chain alone – how incredible is that!

Me: That’s very true. The influx of financing for green hydrogen projects meant increased supply of renewable energy to neighboring countries. Oh, and with electrification came some new industries too. Textile manufacturers, African and international businesses have found Namibia to be a good location to build industries – so more people in the job market.

Aina: And we no longer import electricity either?

Me: Nope. Built on electricity access – Namibia for decades depended on the electricity imports from the South Africa Development Community (SADC) region. Pathways for export to African countries like South Africa are being set up to encourage decarbonization in those regions.

Aina: That’s fantastic! The GDP has also increased, and according to my family here the standard of living is almost unimaginable to what it was.

Me: Yes, completely. The government introduced the energy transition into a lot of the school curriculum as well as sustainability and conservation areas too. So now, post-studying students are specializing in joining the e-mobility manufacturing plants, financing institutions, circular economy and low carbon emission research and a host of other programmes. So many international students from across African regions now study here, gaining professional courses every year.

Aina: I’m so proud and happy to be back home, Namibia over the years strategic positioning as an attractive investment destination in Africa really paid off. Those highlights from Bloomberg, as an emerging market economy5 in Africa had no doubts either.

Me: It sure did, positioning itself as a leader in the emerging market for another hot resource: green hydrogen6. A joint communique signed in August 20217 birthed a series of continental and international and bilateral partnerships on the production of green hydrogen. In 2021, a report by Hydrogen Council, in collaboration with McKinsey & Company, identified 228 large scale hydrogen projects across the value chain that have been announced8 – this figure has significantly increased over the years now.

Aina: This was such an eye-opener for me. In 2021, there was no need to downplay the challenges of hydrogen emerging as a global fuel. The cost was daunting, I recall a time when a supply chain could barely be established.

Me: The Namibia government saw and understood hydrogen to be an enabler for a renewable energy revolution, positioning itself in a space that is now inevitable.

The Africa energy corridor has been rightly renamed as the ‘Energy port of Africa’

It was about time for Aina's first communication meeting, she had the role to work with the government of Namibia towards dealing with the Public Relations activities and international publications from the Energy Port of Africa.

We waved our goodbyes and looked forward to attending the Africa Hydrogen Summit in Durban South Africa in the coming weeks.

Originally written for and published by The Electricity Hub

Since late September 2021, media platforms across Nigeria have been awash with the debates around the legality of claiming Value Added Tax (VAT); the state or the federal government. VAT is the consumption tax paid on all goods and services provided or imported into Nigeria.

The 1999 Constitution sets that the Federal Government (FG), through laws of the power of the National Assembly, are to make legislative orders on matters contained in the exclusive list.

To this end, the exclusive list states that the power of the Federal Government shall collect ‘taxation of income, profits and capital gains, except as otherwise prescribed’ with no mention of VAT collections.

The Federal Inland Revenue Service (FIRS) is mandated for revenues accruing to the FG but has also solely been responsible for administering and managing VAT. The Federal High Court (FHC) recently ruled in favour of the Rivers State Government (RSG), while the Court of Appeal (COA) granted the appeal by the FIRS to stay execution on an earlier judgement of the FHC.

As a result, the decision on who collects VAT; State or the Federal Government, still lingers. Following the FHC ruling that the federal government or any of its agencies lacks the powers to impose and collect VAT or any other tax not explicitly provided for in the Constitution, uncertainty remains in taxpayers’ minds regarding compliance.

A ruling by the Apex court in favour of the RSG will usher in a different era for VAT collection in Nigeria driven by state governments. Individual states will then appoint their respective tax agencies to supervise the collection of taxes.

Little is being thought about what State VAT collection could mean for the Electricity sector. Nigeria’s electricity sector value chain comprises generation, transmission and distribution sub-sectors that support the delivery of electricity to end-users connected to the national grid.

Distinct in their functions, these sub-sectors collaborate and have assets, operations, and networks that transcend state boundaries. Historically, VAT has been a topical issue in the electricity market following the privatization of the distribution and generation segment of the value chain. The distribution segment is the main point of revenue collection from customers, with the funds collected flowing down the value chain to other market participants. However, there have been intermittent disagreements with the federal tax authority on VAT treatment from electricity sales and attendant compliance approach.

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From the “Cash” vs “accrual” method of accounting for VAT, the argument of whether electricity is a “good” or “service” to the argument of whether DisCos should claim Input VAT against Output VAT. What we have seen is maturity, tact, consideration, and professionalism in the Federal Inland Revenue Service (FIRS) ‘s approach to dispute resolution under the guidance of the Ministry of Finance (MOF). While some of these issues have been resolved via a clear Federal Government (FG) directive through the 2018 VAT modification order – highlighting that VAT in the Nigerian Power Sector should have one collection point – in this instance, the DisCos – it is obvious that understanding of the liquidity challenges of the sector at the federal level helped the FG take such stance.

State collection of VAT is expected to impact the electricity market, from the DisCos to state tax officials and possibly electricity end-users in the following ways:

1. VAT Remittance: Currently, VAT is remitted by the DisCos to a single collection authority – the FIRS. However, the new VAT regime may necessitate some additional administrative burden for the DisCos and other market participants. The burden is because they must account for VAT to remit to the various tax authority of states where they operate. Note that nine (9) of the eleven (11) DisCos in Nigeria operates in more than one state. Therefore, holistically, this will mean a DisCo in State A (which operates state B, C, D) will have to introduce an administrative structure that remits VAT on electricity payments made in state D to State D’s government.

2. Energy Accounting: Given that VAT is a consumption tax, it should be computed based on energy consumed by customers in a state’s geographical area. But the market reality is that energy consumed may not translate to cash collected from energy sales due to commercial and technical loss for post-paid customers and advance payment for prepaid customers. Therefore, it makes sense that DisCos’ VAT remittance should be cash-based given liquidity constraints and the above peculiarity. However, state tax authorities may hold a different view from this cash-based approach favouring the accrual approach that focuses on receivables as a base. Nonetheless, the VAT to be remitted to states will likely be determined based on energy consumed by customers in the state’s geographical area. It is expected that economically and commercially more active states like Lagos and Rivers will get more VAT based on this approach, given that more economic activities impact positively on load demand and productive use of power.

3. The Resurrection of Old issues: The 2018 VAT modification order was meant to put to rest the debate between the FIRS and DisCos on the subject of a claim on Input VAT vs Output VAT. However, this issue may likely resurrect in a new frontier between the state tax authorities and electricity market operators. For instance, a Generation Company (GenCo) in state A may be required to issue a VAT invoice for energy supplied to the grid. At the same time, the DisCo in state B will be required to remit VAT while purchasing electricity for resale. More so, gas suppliers to GenCos may not be excluded in the requirement to issue a VAT invoice. This is as the various state tax authorities will likely take positions that will be more favourable to their revenue profile from VAT independently, not considering that the electricity value chain is interlinked across geographical boundaries. This will result in incidences of double taxation and increased cash strain in a sector that already has acute liquidity constraints.

4. Reversal of Progressive VAT Exemptions: The power sector has traditionally enjoyed various incentives under the current VAT regime. Most recently, the exemptions under the 2020 VAT modification order extended to renewable energy equipment that supports the promising off-grid power sector. However, the state governments may view these exemptions differently and reverse them in their various tax laws.

5. Tax Dispute Resolution: The electricity market is a unique sector that requires a deep understanding of its issues and constraints for successful collaboration. While tax compliance is the responsibility of every taxable entity and corporate body in a state, managing this relationship between the tax authority and electricity market players require a sound knowledge of the sector. The power sector has thrived on the FIRS understanding and appreciation of the sector and instances of the principal ministry – the Ministry of Finance remaining abreast with the sector issues. These have been evident through active involvement in resolving the liquidity crisis in the sector via various intervention funds in collaboration with the Central Bank of Nigeria and other multilateral agencies. However, this place of understanding will likely evaporate in a new state VAT collection regime in the event of tax dispute resolution between power sector participants and the state tax authorities. The state tax authorities may be limited in understanding the end-to-end operation of the power sector and the far-reaching effect their enforcement actions may have on a participant’s operation during tax disputes. We are aware of gross misconduct (with experiences where power sector staff have been restrained from premises and substations) with officials of state tax authorities towards state taxes and levies like business premises, personal income taxes etc. Therefore, to ensure state authorities are cordial towards tax collections, investments into enlightenment on power sector issues must be paramount.

6. Revenue Flow: It is anticipated that the current move by state governments will improve the states’ revenue profile, which will enable them to participate in more power project investments. While this is true, there is some blindside to this argument. A State-imposed VAT collection regime will be unfavourable to many not commercially vibrant states and will make them worst-off. Again, some poor states are likely to be more aggressive given new powers and little technical know-how. As a result, DisCos operating in such states are likely to be seen as cash cows, possibly precipitating bureaucracy and disputes. The potential aftermath of the new VAT regime on less commercially viable states will drive states to explore more ideas to be more economically viable.

7. Power Sector Interventions: It is important to note that derivation from the VAT treasury is helpful for the FG to fund power sector interventions that are beneficial to all states of the federation. According to the National Bureau of Statistics, VAT contributed N1.53 trillion to the federation account in 2020, shared between the FG and the 36 states. Where this revenue source is unplugged and disrupted, the FG may struggle to fund various power sector interventions.

While there are valid pros and cons on both sides of the argument, consideration must be given to provisions of the law and capacity for collection. This will ensure that there is no revenue leakage, given the dire funding needs in the power sector. Furthermore, depending on the final position reached on the matter, proper power sector stakeholder engagement is crucial during implementation to enable stakeholders to maintain current incentives to the sector, ease VAT administration, and prevent more constraints on the already burdened power sector.

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*Collins Obi is an energy specialist with solid and diverse practical consulting experience that cuts across the private and public sectors. Thank you Collins!

photo: The Electricity Hub

Till next time,

Oghosa