- Nigeria is pioneering the journey towards getting a strong foothold in the carbon credit market.
- The nation is aligning as part of continental effort under the African Carbon Markets Initiative (ACMI) that aims to mobilize up to $100 billion carbon credits per year by 2050.
- During the COP29 talks, Canada and Nigeria announced an alliance to create an innovative carbon credit model to support Abuja’s economic and ecological development.
The African continent is facing increasing climate change impacts that are increasingly chocking the life of its struggling economies. With policymakers running out pf options to counter the economic slide, the emergence of the African Carbon Markets Initiative (ACMI) offers innovative options that could help unlock the continent’s carbon credit potential. A number of countries such as Nigeria are emeging as pioneers in tapping the gains that carbon markets present.
At this year’s United Nation Climate Change Conference of Parties (COP29) in Baku, Azerbaijan, Canada and Nigeria announced a strategic partnership to create an innovative carbon credit model to support Abuja’s economic and ecological development.
“This project, led by Nigeria’s National Agency for Science and Engineering Infrastructure (NASENI) and the DigiHub Shawinigan, establishes a carbon offset system specifically designed for the Nigerian market, enabling credits generated to be reinvested directly into the local economy. The goal is to fund the transition toward carbon neutrality while integrating each country’s sustainable development objectives,” EINPresswire reported.
The partnership comes at a moment when the continent is striving to find sensible technological means to tackle climate issues and achieve economic breakthroughs at the same time.
“We are proud of this partnership, which enables Nigeria to strengthen its industrial infrastructure while playing an active role in the global fight against climate change,” said Khalil Halilu, CEO of NASENI. He added that, “By implementing a local carbon credit mode, we lay the foundation for a green and sustainable economy for Nigeria.”
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What is a carbon credit?
Carbon credits, also known as carbon offsets, are certificates issued to entities that help reduce greenhouse gas emissions through various projects such as renewable energy, energy efficiency, or reforestation programs. These credits can be traded on the international markets, allowing countries or companies to offset their emissions.
On a broader scale the value of the global carbon credit market is growing exponentially, reaching a record $909 billion last year. A report by Carbon Credit argues that Africa, a continent with vast green energy reserves, is looking ahead to amplify its share in worldwide carbon trading to finance key development projects.
Nonetheless, Africa is facing several challenges to combat climate change and accelerate the pace at which economies are adopting green energy transition. The global participants in the United Nations Framework Convention on Climate Change (UNFCCC) have pledged to support developing nations in Africa by providing financial aid, infrastructure aid, and technological assistance to speed up climate actions.
Nigeria, which is Africa’s second leading oil producer is one of the nation’s pioneering the journey towards getting a strong foothold in the carbon credit market. ACMI aims to mobilize up to $100 billion carbon credits per year by 2050.
Read also: Climate change finance, accounting for ‘green wealth’, top agenda for Africa as COP29 opens
Nigeria’s carbon credit
The Western African nation is on the front row of harnessing carbon credit opportunities. According to a report by Carbon Credits, President Bola Tinubo announced at the COP28 climate conference that Nigeria is set to establish a special committee that will draft a nation carbon market strategy.
The President noted that his country will align itself to acquire a substantial $2.5 billion opportunity within the ACMI. Nigeria committed to achieving net zero carbon emissions by 2060, but faces a significant funding challenge to advance its climate strategy.
The recent initiative by Africa’s largest economy will have a pivotal role in addressing the country’s extensive carbon credit potential. Nigeria needs roughly $2 billion in financing to meet its ambitious net zero goals.
According to Mondaq a data analytics solution, carbon credit trading is facilitated by the United Nations Framework Convention on Climate Change (UNFCCC) and the Nigerian government. Nigerian companies or organizations develop projects that reduce greenhouse gas emissions such as solar power plants or sustainable farming initiatives.
“Independent auditors verify the project’s emissions reductions. The project is registered with the UNFCCC or other recognized carbon credit registries. Carbon credits are issued to the project developer based on the verified emissions reductions. They are traded on international markets like the European Climate Exchange or the International Emissions Trading Association,” The Mondaq report states in part.
Nigeria’s engagement with carbon markets is strategically linked to its development priorities and Nationally Determined Contributions (NDCs). The country aims to meet its commitments under the Paris Agreement, specifically Article 6, which outlines global trade rules for reducing greenhouse gas emissions.
Mondaq argues that Nigerian companies or organizations develop projects that reduce greenhouse gas emissions, such as solar power plants or sustainable agriculture initiatives.
“Independent auditors verify the project’s emissions reductions. The project is registered with the UNFCCC or other recognized carbon credit registries. Carbon credits are issued to the project developer based on the verified emissions reductions. They are traded on international markets like the European Climate Exchange or the International Emissions Trading Association,” the Mondaq report indicated.
Interestingly, the nation’s engagement with carbon markets is strategically linked to its development priorities and Nationally Determined Contributions (NDCs). The country aims to meet its commitments under the Paris Agreement, specifically Article 6, which outlines global trade rules for reducing greenhouse gas emissions.
Nigeria’s carbon market approach
However, the West African nation brings a rather interesting approach in handling the new and yet lucrative carbon market. The Mondaq report pointed out that, collaborative efforts are underway between government agencies, the Central Bank of Nigeria, and the private sector prioritizing access to carbon markets in alignment with the Paris Agreement’s cooperative model.
