Examining the role of energy efficiency and non-economic factors in energy demand and CO2 emissions in Nigeria: Policy implications

This paper examines the role of energy efficiency and non-economic factors such as consumers' preferences, lifestyles and values (which have hitherto been ignored) in energy demand and CO2 emissions modelling for Nigeria. We use a structural time series model to estimate various energy demand and CO2 intensity models that take account of the aforementioned factors. We adopt preferred models from these estimates to analyse how energy demand and CO2 emissions in Nigeria might evolve by generating three different future scenarios to 2025. We find energy efficiency and non-economic factors to influence energy demand and CO2 emissions. The long-run income and price elasticities obtained differ significantly from those in existing studies that have ignored these salient factors. In a business-as-usual scenario, the results indicate that energy demand will continue to grow. Consequently, present policies do not sufficiently mitigate aggregate CO2 emissions in Nigeria. The lesson for policy makers is that the extant policies introduced to restrain CO2 emissions (from a production perspective) have to be combined with new policies that influence consumers' lifestyles and behaviours, develop energy efficient technologies and apply low tariffs on imported energy efficient appliances, to drive down CO2 emissions from a consumption perspective.