- Nigeria’s federal government is set to introduce a carbon tax policy and budgetary system, in line with the approved Energy Transition Plan, as part of the Climate Change Act.
- The harvest of these emissions reductions is generally contained in an emissions reduction certificate.
President Muhammadu Buhari GCFR recently approved Nigeria’s Energy Transition Plan, driven by the National Council on Climate Change Act 2021. The Carbon tax or tax on greenhouse gases comes in two broad forms: an emissions tax, which is based on the quantity an entity produces, and a tax on goods or services that are generally greenhouse gas-intensive, such as a carbon tax on gasoline. Under the arrangement, the federal government is expected to set a price which emitters pay for each ton of greenhouse gas emissions. The tax, apart from helping to generate revenue for the government, will encourage consumers to switch fuels, adopt new technologies and reduce emissions to avoid paying the tax.
Director-General (DG) of NCCC, Salisu Dahiru, said, “The Carbon budget is now going to provide allowances for every entity, whether government or private sector, in terms of how much emissions it may be allowed, and exceeding those emissions could also attract penalties. What will be the nature of these penalties? These penalties will be contained in another deliverable that the Climate Change Act has also requested the council to do. That is to develop a framework for a carbon tax system in Nigeria. It will also look at where projects are being implemented in the country.”
He added that these projects could reduce overall carbon or greenhouse gas emissions. The harvest of these emissions reductions are normally contained in what we call emissions reduction certificate, which can be translated into carbon credit, and then sold to potential buyers within the country and outside”.