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Manufacturers Need Energy Efficiency, Cleaner Production

With the potential to reduce energy consumption and slash manufacturers’ production cost by as much as 30 per cent, reduce wastages, and also help cut greenhouse emission and propel Nigeria’s goal of achieving net-zero emissions, the adoption of industrial energy efficiency and cleaner production processes has become a compelling proposition. A win-win for all stakeholders, including consumers, industry operators and the environment, the ubiquitous adoption of energy efficiency could be the tonic to galvanize an economy hobbled by energy access deficit, with economic impact estimated at $28 billion.

Nigerian manufacturers are between the rock and the hard place with regard to energy consumption and cost. While the current asphyxiating high cost of generating alternative energy for their operations is a major disincentive, sometimes forcing many of them out of business, the energy supply from the national grid has been everything but reliable and business-friendly.

Yet, the snag is that while inadequate access to grid energy supply to power their operations necessitated the use of alternative sources, this option doesn’t come cheap; in fact, it is killing, literarily. For instance, manufacturers’ expenditure on self-energy generation gulped a staggering N144.5 billion in 2022 alone, representing 87.13 per cent increase from N77.22 billion in 2021.

However, manufacturers are not the only ones affected by Nigeria’s age-long energy access deficit. Individual electricity consumers are also hurting, as Nigeria, despite boasting a Gross Domestic Product (GDP) of $472.646, still has one of the highest energy poverty rates in the world, with 47 per cent of her population not having access to grid electricity; those who do have access, face regular power cuts.

The thing is that despite the importance of energy to Nigeria’s economy, low access to modern energy services remains one of the principal constraints to the country’s economic development, with the National Programme Coordinator, Environment & Energy, United Nations Industrial Development Organisation (UNIDO), Oluyomi Banjo, putting the economic impact of Nigeria’s unreliable grid operations at an estimated $28 billion.

But it is not so much the huge investment by manufacturers in self-energy generation, which, ordinarily, should have been ploughed back in expanding their businesses and employing more Nigerians, or the fact that the overall economy, as a result, is bleeding profusely. Rather, it is the consensus that the resort to alternative energy sources, most of which are harmful to the environment, needed to be checkmated.

Accordingly, industry operators, including energy and environmental experts, are on the same page that the way to go is to drive the widespread adoption of Industrial Energy Efficiency (IEE) and cleaner sources of energy. According to them, this will, for a start, significantly cut production cost for manufacturers who are the biggest energy users, reduce wastages, help cut greenhouse emission and hopefully, propel Nigeria’s goal of achieving net-zero emissions by 2060.

Simply put, energy efficiency, according to the Environmental and Energy Study Institute (EESI), involves minimizing energy waste by using less energy to perform tasks efficiently. The concept is widely considered by industry, energy and environment experts as being critical in optimizing energy utilization and reducing waste across production and consumption.

This must be why UNIDO in partnership with the Global Environment Facility (GEF) and the Manufacturers Association of Nigeria (MAN) is leading the charge to encourage Nigerian manufacturing firms to adopt energy cost saving measures and cleaner and safer production processes to protect the people and the environment they operate in and the future.

UNIDO is a specialized agency of the United Nation charged with promoting inclusive and sustainable industrialisation in developing countries and economies in transition. Its activities are tailored toward developing industrial policies that are resource-efficient as well as protective of the natural environment and human health.

UNIDO, according to Banjo, has implemented industrial energy efficiency in over 18 countries around the world and has also implemented resource efficiency and cleaner production in over 60 countries. The GEF, on the hand, is a multilateral environmental fund that provides grants and blended finance for projects related to biodiversity, climate change etc.

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GEF is the largest source of multilateral funding for biodiversity globally, and distributes more than $1 billion a year on average to address inter-related environmental challenges.

MAN, on its part, represents the interests of over 3,000 manufacturers (small, medium, large and multinational industries) spread across 10 sectors, 76 sub-sectors and 16 industrial zones. Its members are heavy users of electricity in Nigeria, which explains the Association’s keen interest in all electricity related discourse and development.

It was, therefore, in a bid to drive the adoption of energy efficiency and resource efficient cleaner production by operators in Nigeria’s industrial sector that UNIDO and GEF closed ranks with MAN to organise a ‘Public-Private Dialogue Session for CEOs and Relevant Government Agencies on the GEF-UNIDO Industrial Energy Efficiency (IEE) and Resource Efficient Cleaner Production (RECP) Project’ in Lagos, last week Wednesday.

The dialogue session was exclusively for CEOs of companies operating within five sectors including Food and beverage, Basic Metal, Wood, Textile & Lather sectors, and the Petrochemical sub-sector. The five pilot industrial sub-sectors for the IEE&RECP project were selected because they consume more energy than other sectors.

The session considered the implementation status of the GEF-UNIDO IEE & RECP Project, deepened conversation on the impact of relevant energy and environment related policies on the continued survival of industries and discussed the role of CEOs and regulators in ensuring the successful actualisation of the project’s set objectives.

It also allowed CEOs of selected industrial enterprises to share experiences and testimonies on the benefits of adopting IEE & RECP methodologies in manufacturing operations.

Explaining the rationale for the Project, Banjo, in his welcome remarks, said lack of reliable access to electricity is one of the major constraints to the private sector, citing World Bank’s ‘2020 Doing Business Report’. He, therefore, said improving power sector performance, particularly in the non-oil sector, will be crucial to foster economic growth.

Banjo indicated that globally, industries account for one-third of total energy consumption and for almost 40 per cent of worldwide CO2 emissions. He said as a result, the International Energy Agency (IEA) has emphasized that industries will need to reduce their current direct emissions globally by about 24 per cent in comparison to 2007 levels.

His words: “The need to reduce energy consumption, environmental degradation, and resource depletion by industries in emerging economies is especially evident, since global growth in industrial production since 1990 has been dominated by emerging economies like India and China, both of which account for over 80 per cent of increased industrial production during this period.”.

The UNIDO National Programme Coordinator traced Nigeria’s march to IEE & RECP to 2017 when the project was collectively developed and submitted by UNIDO under the GEF 6 Programming Circle. He said it was approved for full project development in 2017 and subsequently approved for full project implementation in 2020.

According to Banjo, the outcome of the project was targeted at industries to develop an expert base for Nigeria which could also be exported to other countries in Africa and beyond. “This project will, to a large extent, address the question on how industries can improve their efficiency, increase profitability, operate at international best standards, comply with regulations and maintain improved relationship with policy makers,” he stated.

Banjo said a pilot financing RECP-IEE scheme has been executed through Nigeria’s Bank of Industry (BoI), while issues around ISO 50000 and 14001 are executed through Standards Organisation of Nigeria (SON).

The IEE, which is the first pillar of the Project, focuses on the use of Energy Management System (EnMS)/Energy System Optimization (ESO)/ISO 50001 Series approach tailored to Nigeria’s industrial sector conditions, while RECP, which is the second pillar, provides technical assistance package for the continuous application of preventive environmental strategies to processes, products and services.

On the strength of both pillars, Banjo said the project hopes to support not less than 75 industries across the afore-mentioned five sectors. “We will develop the capacity of the Organised Private Sector (OPS) and develop not less than 300 Nigerian RECP-IEE experts,” he added.

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Some of the benefits of IEE and RECP in industries include increased production efficiency, environmental management and social enhancement. Others are the opportunity of optimizing the use of natural resources and minimizing environmental impacts through reduction in industrial chemical risks to workers and communities.

By adopting energy efficiency, manufacturing firms in Nigeria can reduce overall electricity demand and optimize existing resources, making power production more effective. By helping to reduce greenhouse gas emissions, the concept also aligns with Nigeria’s goal to achieve net-zero emissions by 2060.

Expectedly, these mouth-watering deliverables from the adoption of energy efficiency, which is a multi-faceted strategy that benefits consumers, industry stakeholders and the environment, are music in the ears of Nigerian manufacturers. This is because of its capacity to enhance the sustainability of the nation’s electricity sector, drive the manufacturing sector’s sustainability and contribute to broader economic and environmental goals.

MAN President Otunba Francis Meshioye conveyed manufacturers’ sentiment in favour of energy efficiency when he said the implementation of the IEE and RECP Project “Marked the beginning of a defining moment in manufacturing industries’ collective journey toward sustainable practices that not only drives growth but also preserve the planet for generations to come.”

Meshioye said: “As we embrace the principles of energy efficiency, we will not only be reducing our carbon footprints, but also be mitigating environmental degradation and saving energy cost. In return, the efficiency, competitiveness and resilience of our operations will be enhanced to meet the increasing demands of our ever-evolving global marketplace.”

The MAN President, in a welcome address delivered on his behalf by Prince Felix Oba Okojie, said the challenges posed by energy efficiency are multi-faceted, encompassing not only economic considerations but also environmental impacts and social implications.

He, however, said embedded within the challenges are opportunities to innovate, optimize, efficiently utilize resources and to lead the way toward a more sustainable future.

Sharing his company’s experiences and testimonies on the benefits of adopting IEE & RECP methodologies in manufacturing operations, the Manager, Engineering Services, PZ Cussons, Mr. Wahid Falola, confirmed that through energy efficiency his company has been able to achieve 30 per cent reduction in cost of production.

Falola revealed that the first thing the consumer goods manufacturing giant did to achieve the feat was the setting up of a data management system, including carrying out an energy audit to determine the company’s actual energy requirement, choosing energy-efficient appliances and ensuring that devices are turned off when not in use to reduce energy consumption.

However, while the adoption of energy efficient and cleaner production strategies is gaining traction, it is not a stroll in the park. Stakeholders in the industrial sector say that sustained government support is vital in driving the widespread adoption of efficient alternatives such as Compressed Natural Gas (CNG) and renewable energy source.

For instance, investment in renewables like solar will not only promote cleaner climatic environment but ensure that energy consumption is cost efficient, and that the cost savings will directly improve profit margin and promote further manufacturing investments.

But the Director, Corporate Services, MAN, Mr. Ambrose Oruche, said investment in renewal energy is huge. He therefore said “There is need for incentives by the government to encourage manufacturers to go into renewable energy. There should be special funding for industries willing to adopt renewable energy.”

Oruche also lamented that the price of gas, which is the alternative to diesel, is currently high. This, he said, was why MAN had long been pushing for government to, under the National Gas Policy, re-categorise manufacturers from commercial sector to strategic industrial sector since they (manufacturers) use gas to power their machinery and equipment.

Source: nation

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