Energy Supply and Climate Change in Nigeria

The energy industry has been identified as one of the sectors most vulnerable to the impact of climate change. In the past years, government had been making a lot of effort at reforming the energy sector and this study attempted to investigate the extent to which the energy sector will be affected in the face of the threats presented by a changing climate. The study seeks to examine the impact of climate change on energy supply in Nigeria for the period 1971-2011 using the vector error correction procedure. We adopted the Johansen and Juselius, and Engle-Granger co-integration analysis to determine the rank of the series long run co-integration. Also the error correction model was used to obtain the long-run estimates and the speed of error adjustment. We corroborate our findings by adopting the Wald exogeneity test to examine the direction of causal relationship between climate change and energy production. The study found a positive relationship between climate change and energy supply, as well as no evidence of causal relationship between climate change and energy supply. This could be due to the nature of energy production in Nigeria whereby in the process of oil exploration, the associated gas is being flared which is the major contributor to increased CO2 emission in Nigeria. Findings from the study have implications for the economy in terms of adherence to the Kyoto protocol as it can jeopardize productivity activities and economic gains since policies to curtail emission can affect energy production. Also, adaptation efforts should follow careful scenario analysis with a strengthened institutional framework and injection of funds for technological improvement. This could be done in partnership with international organizations and the private sector.