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<p>The global shift toward climate-friendly energy systems presents both a challenge and an opportunity for resource-dependent economies like Nigeria. This study investigates the macroeconomic implications of transitioning from fossil fuels to cleaner energy alternatives, specifically natural gas and renewable energy, using a dynamic Computable General Equilibrium (CGE) model based on Nigeria’s 2018 Social Accounting Matrix. The analysis aligns with the broader goal of balancing economic growth and environmental sustainability, central to Africa’s climate and trade policy discourse. Three policy scenarios are simulated: the Current Policy Scenario (CPS), Gas Energy Scenario (GES), and Renewable Energy Scenario (RES), to evaluate their long-term impacts on key macroeconomic indicators, including real GDP, investment, sectoral value-added, and emissions intensity up to 2060. Results reveal that while CPS and GES yield stronger growth trajectories with real GDP peaking at 4.6% and 4.5% respectively, the RES scenario lags, reaching a modest 1.5% peak. Investment patterns echo this trend, highlighting the pivotal role of gas as a transitional fuel that balances growth and emissions mitigation. Sectoral performance under CPS and GES significantly outpaces RES, particularly in industry and services. Notably, the RES scenario achieves the greatest reduction in emissions relative to GDP, but at the cost of subdued economic performance. These findings highlight the central trade-off between aggressive decarbonisation and developmental objectives in Africa’s low-carbon transition. This paper contributes novel insights into the design of climate-friendly trade and energy policies that are both growth-oriented and environmentally responsible. It calls for strategic sequencing and investment in transition infrastructure to ensure a just and resilient transformation of African economies, with lessons that extend beyond Nigeria.</p>

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Macroeconomic effects of Nigeria’s energy transition with a dynamic CGE analysis of natural gas and renewables

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年7月1日

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  • Ojo Johnson Adelakun,
  • Abiola Akande,
  • Yemisi Adelakun

摘要

The global shift toward climate-friendly energy systems presents both a challenge and an opportunity for resource-dependent economies like Nigeria. This study investigates the macroeconomic implications of transitioning from fossil fuels to cleaner energy alternatives, specifically natural gas and renewable energy, using a dynamic Computable General Equilibrium (CGE) model based on Nigeria’s 2018 Social Accounting Matrix. The analysis aligns with the broader goal of balancing economic growth and environmental sustainability, central to Africa’s climate and trade policy discourse. Three policy scenarios are simulated: the Current Policy Scenario (CPS), Gas Energy Scenario (GES), and Renewable Energy Scenario (RES), to evaluate their long-term impacts on key macroeconomic indicators, including real GDP, investment, sectoral value-added, and emissions intensity up to 2060. Results reveal that while CPS and GES yield stronger growth trajectories with real GDP peaking at 4.6% and 4.5% respectively, the RES scenario lags, reaching a modest 1.5% peak. Investment patterns echo this trend, highlighting the pivotal role of gas as a transitional fuel that balances growth and emissions mitigation. Sectoral performance under CPS and GES significantly outpaces RES, particularly in industry and services. Notably, the RES scenario achieves the greatest reduction in emissions relative to GDP, but at the cost of subdued economic performance. These findings highlight the central trade-off between aggressive decarbonisation and developmental objectives in Africa’s low-carbon transition. This paper contributes novel insights into the design of climate-friendly trade and energy policies that are both growth-oriented and environmentally responsible. It calls for strategic sequencing and investment in transition infrastructure to ensure a just and resilient transformation of African economies, with lessons that extend beyond Nigeria.