As the global community intensifies efforts to combat climate change, Nigeria is positioning itself to harness the economic and environmental benefits of carbon pricing. The nation’s recent initiatives signal a commitment to developing a robust carbon market, but questions remain about its readiness to implement such mechanisms effectively.
Federal Government’s Ambitious Plans
In early 2024, the Nigerian government inaugurated the Intergovernmental Committee on Carbon Market Activation Plan. This committee, chaired by Zacch Adedeji of the Federal Inland Revenue Service, is tasked with creating a sustainable carbon market ecosystem blueprint. The initiative aligns with President Bola Tinubu’s pledge at COP28 to reduce Nigeria’s carbon footprint and tap into the estimated $2.5 billion carbon market.
Vice President Kashim Shettima emphasised the administration’s focus on natural gas as a transition fuel and the importance of developing a national carbon market strategy. The committee’s formation is a significant step toward achieving Nigeria’s climate goals and fostering economic growth through green investments.
Projected Economic and Employment Benefits
The Nigeria Carbon Market Activation Policy (NCMAP) is expected to unlock a carbon market worth between $736 million and $2.5 billion by 2030. Beyond financial gains, the policy aims to create between 600,000 and 2.3 million green jobs for Nigerian youth, contributing to sustainable development across the country.
Ambassador Nura Rimi, Permanent Secretary of the Ministry of Industry, Trade, and Investment, highlighted the policy’s role in establishing a transparent carbon market and providing a conducive environment for both local and foreign investments.
Private Sector Engagement and Agricultural Initiatives
Private sector participation is crucial for the success of carbon pricing mechanisms. ThriveAgric, an agritech company, is leading a pilot program to plant fruiting trees alongside staple crops, enabling farmers to sequester carbon and earn carbon credits. This initiative, starting with 30,000 farmers and aiming to expand to 200,000, exemplifies how agricultural practices can contribute to carbon offsetting efforts.
Regulatory Measures in the Oil and Gas Sector
Starting January 1, 2025, Nigeria will require all applicants for oil licenses and permits to demonstrate evidence of low carbon emissions and possess a renewable energy program. The Nigerian Upstream Petroleum Regulatory Commission introduced the Upstream Petroleum Decarbonisation Template (UPDT) to guide applicants, aligning the upstream petroleum industry with national and international climate goals.
Challenges and Considerations
While these initiatives are promising, Nigeria faces challenges in effectively implementing carbon pricing. Establishing a transparent and efficient carbon market requires robust regulatory frameworks, capacity building, and stakeholder engagement. Ensuring that carbon pricing mechanisms do not disproportionately impact vulnerable populations is also essential.
Conclusion
Nigeria’s recent policy developments and initiatives indicate a strong commitment to embracing carbon pricing as a tool for climate mitigation and economic growth. However, the success of these efforts will depend on the country’s ability to address implementation challenges and foster collaboration among government agencies, the private sector, and civil society.