An Abuja-based policy think tank, Agora Policy, said Nigeria’s growing energy demand, persistent electricity shortages, and continued dependence on fossil fuels present significant challenges to economic growth, energy security, and climate resilience.
A maiden report by the policy think-tank titled “Imperative of Integrating Green Hydrogen into Nigeria’s Energy Mix” said despite being one of Africa’s largest economies, Nigeria continues to face profound energy challenges that constrain its economic and social development.
The country has one of the world’s largest electricity access deficits, with more than 85 million people lacking access to reliable electricity. Even for those connected to the grid, electricity supply remains highly unreliable due to persistent grid instability.
Agora policy said globally, energy systems are undergoing significant transformation, driven by the dual priorities of enhancing energy security and reducing greenhouse gas emissions.
“While the energy crisis triggered by the conflict in Ukraine prompted some countries to increase fossil fuel production and diversify energy supplies temporarily, it also accelerated investments in renewable energy, energy efficiency, and clean energy technologies, particularly across the European Union,” the report said.
Against this backdrop, the policy think tank said Nigeria’s continued dependence on fossil fuels shows the importance of developing a diversified and resilient energy system that leverages its abundant renewable energy resources while supporting sustainable economic growth.
For Nigeria, it said green hydrogen presents an opportunity to leverage the country’s abundant solar resources, existing natural gas infrastructure, industrial base, and strategic export position to diversify its economy beyond oil and key into the green hydrogen market.
“Green hydrogen could help decarbonise fertiliser production by replacing natural gas-derived hydrogen with renewable hydrogen, reducing emissions from ammonia and urea manufacturing. It could also lower emissions in petroleum refineries by supplying clean hydrogen for refining processes such as hydrocracking and desulfurisation.
“In the transport sector, green hydrogen could power heavy-duty trucks travelling long distances, such as freight vehicles moving goods from the South West to the North West, North East, or South East, where long driving ranges and fast refuelling make hydrogen a promising alternative to battery-electric vehicles. However, this would require the development of a nationwide hydrogen refuelling network along major freight corridors to ensure reliable access to fuel,” Agora Policy said.
Recommendations
The policy think tank said the development of Nigeria’s draft National Hydrogen Policy is an important milestone in the country’s energy transition. However, it said successful implementation will depend on effective institutional coordination, sustained investment, supportive regulation, and clear implementation mechanisms.
Agora Policy said the federal government should develop a detailed implementation roadmap that clearly defines institutional responsibilities, implementation timelines, financing mechanisms, and measurable performance indicators.
“A dedicated inter-ministerial coordination committee comprising the federal ministries of Power, Petroleum Resources, Environment, Industry, Trade and Investment, Science and Technology, Water Resources, and Finance should oversee implementation and ensure alignment across sectors. Regular monitoring and annual progress reports should be published to promote transparency, accountability, and investor confidence.”
The report said the government should prioritise investments in renewable energy generation, electrolysers, hydrogen storage facilities, transportation networks, and export infrastructure.
It said the existing industrial clusters and special economic zones, particularly in coastal states with access to ports, should be developed into hydrogen production hubs that serve both domestic industries and export markets.
“Expanding renewable electricity generation is also important, as the economic viability of green hydrogen depends on access to affordable and reliable renewable power. While exports present significant economic opportunities, Nigeria should also develop domestic markets for green hydrogen to reduce investment risks and strengthen industrial competitiveness.”
It said the government should introduce targeted incentives to encourage the adoption of green hydrogen in sectors that are difficult to decarbonise, including fertiliser production, petroleum refining, steel manufacturing, heavy-duty transportation, and shipping.
“Pilot programmes demonstrating hydrogen use in these sectors would provide valuable operational experience while encouraging private sector participation and reducing dependence on fossil fuels,” it said.
Given the high capital costs associated with green hydrogen projects, Agora Policy said Nigeria should establish an enabling investment environment capable of attracting both domestic and international investors.
This, it said, should include fiscal incentives such as temporary corporate tax exemptions for qualifying green hydrogen projects (tax holidays), import duty exemptions for hydrogen equipment, accelerated capital allowances, and access to concessional financing through institutions such as the Bank of Industry and the Development Bank of Nigeria.
“The government should also leverage international climate finance, multilateral development banks, green bonds, and blended finance mechanisms to reduce investment risks. Public-private partnerships should be encouraged to mobilise private capital while sharing project risks and technical expertise.
“The growth of Nigeria’s hydrogen economy will require a skilled workforce and strong domestic research capacity. The government should invest in hydrogen research through universities, research institutes, and centres of excellence while supporting collaboration between academia and industry.
“Technical and vocational institutions should introduce specialised training programmes on hydrogen production, storage, transportation, safety, and equipment maintenance.
“Building local technical expertise will reduce dependence on foreign knowledge, promote technology transfer, create high-quality employment opportunities, and strengthen Nigeria’s long-term competitiveness in the global hydrogen market,” the report said.
Call for global partnerships
It said Nigeria should actively pursue strategic international partnerships to support technology transfer, investment, capacity building, and market access, noting that bilateral cooperation with prospective hydrogen importing countries, particularly Germany, the Netherlands, Japan, South Korea, and others, can facilitate long-term offtake agreements and improve investor confidence.
“Participation in international hydrogen certification schemes and sustainability standards will also be essential for ensuring Nigerian hydrogen products meet global market requirements and remain competitive in emerging export markets. Before scaling up commercial hydrogen production, Nigeria should support pilot projects that demonstrate the technical and economic feasibility of hydrogen technologies under local conditions.”
Agora Policy said demonstration projects in industrial facilities, transportation, power generation, and energy storage will generate valuable operational data, reduce investment uncertainty, and build technical capacity.
“Lessons from countries such as Ghana illustrate that early-stage pilot projects play a critical role in developing local expertise, validating technologies, and attracting larger commercial investments. As hydrogen projects begin to emerge, Nigeria should strengthen its regulatory framework to ensure safe production, transportation, storage, and utilisation of hydrogen.
“Relevant regulatory agencies, including the Standards Organisation of Nigeria (SON), the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), and the Nigerian Electricity Regulatory Commission (NERC), should develop comprehensive technical standards, certification systems, environmental safeguards, and safety regulations aligned with international best practices.
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“Clear regulatory requirements will reduce investor uncertainty, improve public confidence, and position Nigeria to participate effectively in international hydrogen trade,” the report said.
The policy think tank said Nigeria stands at an important moment in its energy transition.
“While the country’s National Hydrogen Policy provides an important foundation, its success will ultimately depend on effective implementation. Building a competitive green hydrogen industry will require sustained investment in renewable energy and hydrogen infrastructure, a supportive regulatory environment, skilled human capital, strong institutional coordination, and meaningful collaboration between government, industry, academia, and development partners,” it said.
It added that green hydrogen should therefore be viewed not as a replacement for Nigeria’s broader energy transition, but as a strategic complement capable of accelerating decarbonisation in hard-to-abate sectors while creating new opportunities for economic diversification and regional leadership.
“By prioritising implementation, fostering innovation, mobilising investment, and strengthening international partnerships, Nigeria can move beyond its traditional role as a fossil fuel producer and establish itself as a competitive participant in the emerging global clean hydrogen economy.
“The decisions made over the coming decade will determine whether Nigeria merely observes the global hydrogen transition or helps shape it. Acting decisively today will position the country to capture the economic, industrial, and environmental benefits of one of the most significant energy transformations of the twenty-first century,” Agora Policy said.
