Macroeconomic and social impacts of Nigeria's net-zero development pathways: a hybrid model analysis

This research explores the macroeconomic and social impacts of five energy-explicit development pathways for Nigeria's economy: Baseline (BAU), Current Policy Scenario (CPS), Gas Economy Scenario (GES), Renewable Energy Scenario (RES) aligned with Nigeria's 2060 net-zero emissions pledge, and a RES variant with international support (RES+). The analysis leverages soft-linking of the top-down KLEM-NGA macroeconomic model and the bottom-up LEAP-NGA energy system model, utilizing a comprehensive energy-economy database including original input-output and energy balance tables. Under the RES scenario, achieving emissions reductions incurs a 3.5% GDP and 3.2% employment loss by 2060 compared to BAU, or a 4.5% GDP loss compared to GES, which fully utilizes gas reserves to fuel the domestic economy and sustain the trade balance. However, the RES+ scenario, augmented by international aid to bridge the investment gap between CPS and RES, results in GDP and employment performances comparable to GES while reducing emissions to 16 million tons of CO2 equivalent in 2060, versus 151 million tons under GES. This transition, conditional on international aid totaling 880 billion USD over 39 years—an average of 1.1% of Nigerian GDP annually from 2022 to 2060—could pivot Nigeria from a short-sighted gas economy towards a sustainable net-zero future.