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Assessing the Macroeconomic Impacts of Financing Options for Renewable-Energy Policy in Nigeria: Insights from a CGE Model

Author

Listed:
  • Oluwasola Emmanuel Omoju
  • Lulit Mitik Beyene
  • Emily Edoisa Ikhide
  • Stephen Kelechi Dimwobi
  • Augustina Ehimare

Abstract

In 2015, Nigeria formulated its Renewable Energy and Energy Efficiency Policy (NREEEP) to promote the development of renewable-energy systems in line with the Paris Climate Agreement and Sustainable Development Goals. With that as inspiration, we examined the effectiveness and macroeconomic impacts of Nigeria’s renewable-energy policy using a computable general equilibrium (CGE) model. We calibrated the PEP-1-1 CGE model on Nigeria’s updated social accounting matrix (SAM) and ascertained the effects on key energy, economic, and environmental variables. We found that a production subsidy was effective in developing the renewable-electricity sector and encouraging the use of renewable electricity, regardless of how the subsidy was financed. The fiscal incentive for the renewable electricity sector had positive impacts on such key macroeconomic and welfare variables as employment, real GDP, household income, and welfare if the subsidy was financed by government deficit. Macroeconomic impacts were unfavourable, however, if the subsidy was financed by adjustments in government expenditures.

Suggested Citation

  • Oluwasola Emmanuel Omoju & Lulit Mitik Beyene & Emily Edoisa Ikhide & Stephen Kelechi Dimwobi & Augustina Ehimare, 2020. "Assessing the Macroeconomic Impacts of Financing Options for Renewable-Energy Policy in Nigeria: Insights from a CGE Model," Working Papers MPIA 2020-01, PEP-MPIA.
    • Handle: RePEc:lvl:mpiacr:2020-01
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    Citations

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    Cited by:

    1. Dimnwobi, Stephen Kelechi & Madichie, Chekwube V. & Ekesiobi, Chukwunonso & Asongu, Simplice A., 2022. "Financial development and renewable energy consumption in Nigeria," Renewable Energy, Elsevier, vol. 192(C), pages 668-677.
    2. Omoju, Oluwasola Emmanuel, 2022. "Are the recent VAT and social investment reforms in Nigeria conducive for social and economic inclusion?," Conference papers 333400, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Ikhide, Emily Edoisa & Umaru, Ezra K. & Oyebola, Fehintola & Omoju, Oluwasola E., 2021. "A CGE Analysis of the Gender Productivity Gap in Nigeria’s Agriculture Sector," 2021 Conference, August 17-31, 2021, Virtual 315922, International Association of Agricultural Economists.
    4. Stephen K. Dimnwobi & Favour C. Onuoha & Benedict I. Uzoechina & Chukwunonso Ekesiobi & Ebele S. Nwokoye, 2022. "Does Public Capital Expenditure Reduce Energy Poverty? Evidence from Nigeria," Working Papers of the African Governance and Development Institute. 22/033, African Governance and Development Institute..
    5. Luo, Bin & Huang, Guohe & Chen, Leian & Liu, Lirong & Zhao, Kai, 2024. "Factorial optimization-driven input-output analysis for socio-economic and environmental effects of GHG emission reduction in electric power systems – A Canadian case study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 192(C).

    More about this item

    Keywords

    Renewable Energy; Energy Policy and the Macroeconomy; CGE models; Nigeria;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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