Insights, Oil and Gas

Unveiling Nigeria’s Carbon Market: Policies, Progress, and Prospects

 INTRODUCTION

World leaders gathered in Paris during the 2015 UN Climate Change Conference (COP21) to endorse the Paris Agreement; an International Energy Treaty grounded in the 1992 United Nations Framework Convention on Climate Change (UNFCCC). Within this pact, they committed to curbing the global rise in temperature to under 2 degrees Celsius above pre-industrial levels, aiming to avert the severe consequences of climate change. Their specific pledge included slashing greenhouse gas (GHG) emissions to 1.5?C by 2030. Nigeria ratified the Paris Agreement in May 2017 and formulated its Nationally Determined Contributions (NDCs), committing to a 20% emissions reduction below Business as Usual (BUA) levels by 2030. Notably, the targets set for the oil & gas sector include eliminating gas flaring entirely by 2030 and achieving a 60% reduction in fugitive methane emissions by 2031.

In 2021, Nigeria announced its net-zero commitment at COP26 in Glasgow. This was followed by the passing of Nigeria’s Climate Change Act 2021 and the subsequent establishment of the National Council on Climate Change (NCCC) vested with the powers to make policies on matters concerning climate change in Nigeria. The Act applies to all Ministries, Departments, Agencies, and public and private entities within the territorial boundaries of Nigeria aiming to foster the development and execution of mechanisms that promote a low-carbon, environmentally sustainable, and climate-resilient economy.

In a continued demonstration of its commitment, Nigeria, alongside several other African leaders, CEOs, and experts in carbon credits, launched the African Carbon Markets Initiative (ACMI) during the COP27 summit in November 2022. This initiative was conceived to encourage private investment in Africa’s energy development and significantly amplify Africa’s involvement in carbon credit markets. These markets enable foreign entities to purchase carbon credits, offsetting their carbon dioxide (CO2) emissions and thereby funding clean energy projects. The carbon credit market presents a significant opportunity for…

 

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