Overcoming Regulatory Failure in the Design and Implementation of Gas Flaring Policies: The Potential and Promise of an Energy Justice Approach
Abstract
:1. Introduction
2. Gas Flaring Policy Failure as an Energy Justice Dilemma
3. Drivers and Dimensions of Gas Flaring Policy Failures
3.1. Methodology
3.2. Results
Instrument Type | Instrument | Summary |
---|---|---|
Command-and-control | Associated Gas Rejection Act of 1979 | Section 3 (2) of the Act sets 1 January 1984 as the end date for oil companies to stop gas flaring, unless with a permission from the Minister. |
Associated Gas Re-Injection (Continued Flaring of Gas) Regulations of 1984 | Sets out conditions that oil companies must fulfil to qualify for a permit or certificate to be issued by the Minister for continued flaring of gas. | |
Associated Gas Re-Injection (Continued Flaring of Gas) Regulations of 1985 | Sets the fine for gas flaring at 2 kobo (equivalent to USD 0.0009 in 1985) against the oil companies for each 1000 standard cubic feet (scf) of gas flared. | |
Associated Gas Re-Injection (Continued Flaring of Gas) Regulations of 1990 | Increased the fine from 2 kobo to 50 kobo per 1000 scf. | |
Environmental Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN) 1991 (as subsequently revised and updated in 2002, 2016, and 2018) | Prescribes mandatory industry guidelines that must be complied with by all operators to address all forms of pollution in the oil and gas sector, including gas flaring. However, the lack of stringency of the standards prescribed by EGASPIN, as well as the exemptions it provides for the Director to provide waivers for gas flaring and pollution activities, remain key concerns. | |
The Associated Gas Re-Injection (Continued Flaring of Gas) Regulations of 2000) | Raised the flare penalty from 50 kobo to NGN 20 per 1000 scf. It also sets 1 January 2004 as the new deadline for the end of gas flaring in Nigeria. The fine increase represented a more than 300 percent increase in the prescribed fine for gas flaring within the space of 20 years. However, the penalties remained meagre when converted to foreign currencies. | |
Nigerian Gas Master Plan 2008 | Sets 31 December 2008 as the new deadline for the end of gas flaring in Nigeria. | |
Gas Flaring (Prohibition and Punishment) Act 2009 | Sets 31 December 2010 as the new deadline for the end of gas flaring in Nigeria. | |
Market and incentives based | Nigerian Gas Flare Commercialization Programme (“NGFCP”) 2016 | The NGFCP program was designed to provide a framework for investors and operators to capture and commercialize flared gas for supply into Nigeria’s domestic market. However, despite the clear and innovative aim of the NGFCP, its implementation has been marred by hesitancy, missed deadlines, policy somersaults, and stagnation. Since 2019, when an initial shortlist of 203 qualified bidders was announced, the process leading to the final shortlist and award of permits has stagnated. |
Flare Gas (Prevention of Waste and Pollution) Regulations 2018 | Section 3 (2) of the 2018 Regulation allows any producer to apply to the Minister for a permit to commercialize and produce flared gas. The flare gas commercialization program is also underpinned by command-and-control provisions. For example, section 13 increased the penalty for gas flaring to USD 2.0 for each 28.317 cubic metres of gas flared for large facilities that produce more than 10,000 barrels of crude oil per day. Small facilities that produce less than 10,000 barrels of crude oil per day are to pay USD 0.50. Section 4 (2) of the Regulation also sets a mandatory reporting requirement under which producers must provide flare-gas data within 30 days of a request by the regulators. Under Section 5 of the Regulation, failure to provide data or providing inaccurate or incomplete data would attract a fine of NGN 50,000 and/or imprisonment of not more than 6 months. Section 21 also includes additional fine (USD 2.50 for each 28.317 cubic metres of gas flared or vented) for failure to maintain or provide gas flaring data. Despite the significant increase in the penalties prescribed, they remain meagre when converted to foreign currencies and have not been stringent enough to deter flaring. Lack of an express provision for financial assurance mechanisms also remained a key gap. | |
Petroleum Industry Act (PIA) 2021 | Section 104 expressly prohibits gas flaring except when permitted by the Minister, while section 105 prescribes penalties and fines in case of default. To encourage operators to commercialize gas, section 108 mandates the submission of a Natural Gas Flare Elimination and Monetization plan within 12 months of the effective date of the license or lease. The flexible approach of the legislation is designed to create incentives for licensees to adopt the most cost-efficient and suitable technologies and approaches that will make gas flaring reduction economically viable for them. However, the discretionary powers of the Minister to grant authorizations for gas flaring remains a key gap under this Act. Greater clarity is required on the procedure and criteria that will be followed by the Minister to grant such waivers for gas flaring in order to ensure transparency and accountability. | |
National visions and targets | 1999 Constitution of the Federal Republic of Nigeria | Section 20 (Fundamental Objectives and Directive Principles of State Policy) provides that “the state shall protect and improve the environment and safeguard the water, air and land, forest and wildlife of Nigeria.” Questions on the justiciability and enforceability of this provision have, however, remained persistent despite recent judicial decisions that clarify this point. |
Nigeria’s National Vision 2020; Petroleum Industry Roadmap; and the National Gas Policy | These documents set an objective of reducing gas flaring in Nigeria by 10 percent by the year 2020 and ending it completely by 2030. These aspirational documents provide essential foundations for increased regulatory action on gas flaring, but the targets are not binding or enforceable. | |
2050 Long-Term Vision for Nigeria (LTV-2050). | Outlines Nigeria’s vision to achieve a 50 percent emission reduction in the energy sector by the year 2050 and net-zero emissions across all sectors by 2099. This is another important aspirational document, but the targets are not binding or enforceable. |
3.2.1. Weak Conceptualization of the Energy Justice Dimensions of Gas Flaring
3.2.2. Inadequate or Incoherent Legal Framework on Gas Flaring
3.2.3. Data Transparency Gaps
3.2.4. Institutional Gaps
4. Failure-Proofing the Design and Implementation Gas Flaring Policies and Regulation: Opportunities and Ways Forward
4.1. Integrate Human Rights Norms into Energy Legislation and Policies
4.2. Establish Channels for Proactive Reporting and Disclosure of Information
4.3. Promote Institutional Cooperation and Capacity
5. Conclusions and Policy Implications
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
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Babalola, A.A.; Olawuyi, D.S. Overcoming Regulatory Failure in the Design and Implementation of Gas Flaring Policies: The Potential and Promise of an Energy Justice Approach. Sustainability 2022, 14, 6800. https://doi.org/10.3390/su14116800
Babalola AA, Olawuyi DS. Overcoming Regulatory Failure in the Design and Implementation of Gas Flaring Policies: The Potential and Promise of an Energy Justice Approach. Sustainability. 2022; 14(11):6800. https://doi.org/10.3390/su14116800
Chicago/Turabian StyleBabalola, Aare Afe, and Damilola S. Olawuyi. 2022. "Overcoming Regulatory Failure in the Design and Implementation of Gas Flaring Policies: The Potential and Promise of an Energy Justice Approach" Sustainability 14, no. 11: 6800. https://doi.org/10.3390/su14116800