In a renewed effort to realise Nigeria’s ambitious Net-Zero targets by 2060, the Federal Government has domesticated and operationalise Paris Agreement’s Article 6 framework as a move to activate the carbon market in the country.
The updated Nationally Determined Contributions (NDCs) reiterated the country’s unconditional economy-wide target to reduce emissions by 20 per cent by 2030 relative to business-as-usual, and increasing its conditional target from 45 per cent to 47per cent.
The Paris treaty promotes voluntary cooperation in the implementation of parties NDCs to allow for higher ambition in mitigation, adaptation actions and to promote sustainable development and environmental integrity.
Article 6 introduces multiple options for cooperation towards achieving the NDCs and higher ambition. Research shows that using carbon markets at a global scale can reduce the global cost of delivering the emission reductions identified in the current NDCs by approximately 30 per cent by 2030, and more than 50 per cent by 2050.
The objective of the Paris Agreement is “to hold the increase in global average temperature to well below two degrees Celsius (°C) above preindustrial levels and to pursue efforts to limit it to 1.5°C (Article 2). The ambition cycle is a “ratcheting-up” mechanism, which aims to increase ambition based on regular stock takes of information from parties, submissions of progressive national climate plans, and the latest science on climate change.
To adopt the process in Nigeria, a two-day training workshop was recently organised by the Federal Government through the National Council on Climate Change (NCCC) in collaboration with the United Nations Development Programme (UNDP) and Neyen Consulting SL, on “Nigeria’s Carbon Market Activation Plan: Nigeria’s Article 6 Framework & Implementation Design under the Paris Agreement”, which aims to position Nigeria as a front-runner in carbon market development, marking a pivotal step towards the practical implementation of Article 6 of the Paris Agreement.
At the forum, the Minister, Federal Ministry of Environment, Balarabe Lawal, represented by the Permanent Secretary in the Ministry, Mahmud Kambari, underscored the importance of carbon markets in achieving global climate goals and Nigeria’s ambitious NDCs targets.
He emphasised that carbon markets serve as a crucial tool to mobilise resources, reduce costs and facilitate the nation’s transition to a low-carbon economy. He highlighted Nigeria’s vast potential to generate millions of tonnes of carbon credits yearly by 2030 through initiatives like reforestation, renewable energy and waste-to-energy projects.
The minister said that unlocking this potential requires international partnerships, capacity building and targeted investments. “Collaboration with international partners and the development of requisite skills and resources are essential to fully capitalise on the opportunities presented by carbon markets,” he stated.
UNDP officials told The Guardian that public funds won’t be enough to finance developing countries’ NDCs. Most emission reduction activities need to be implemented and financed by the private sector. Article 6 acknowledges that countries can pursue voluntary cooperation in the implementation of their NDCs to allow for higher mitigation ambition and to promote sustainable development.
Article 6.2 outlines the possibility of cooperative approaches and the transfer of Internationally Transferrable Mitigation Outcomes (ITMOs) between different actors, including countries and private sector companies, through bilateral agreements. ITMOs use a Carbon Dioxide Equivalent (CO2e) metric for a new set of market provisions or other greenhouse gas mitigation outcomes that are defined under Article 6.2 of the Paris Agreement.
UNDP helps countries like Nigeria to design and implement projects under this Article 6.2 mechanism through its Carbon Payment for Development Facility (CP4D) aims to leverage carbon markets to enable private investments in support of the Sustainable Development Goals (SDGs).
CP4D promotes learning by doing through a dual goal – building a deep understanding of carbon finance at the political, regulatory and technical level while delivering climate and social impacts quickly and at scale. The CP4D is capitalised with $125 million to allow for the implementation of more than six million ITMOs between 2022 and 2030.
Through this initiative, UNDP provides direct financial incentives for ITMO project implementation and is among the first to create concrete demand for a significant volume of ITMOs. UNDP is also engaging with project developers, who can upfront invest in projects and set up public-private partnerships with governments. The financial incentives are then paid ex-post based on third-party verified ITMOs.
Immediate past NCCC Director-General, Dr Salisu Dahiru, said governments are working with private sector and civil society to advance climate action, delivering benefits for local communities and contributing to NDC achievement.
He stressed the imperative of establishing a robust institutional architecture for effective Article 6 activities. The NCCC, functioning as the National Designated Article 6 Authority (NDAA), oversees all transactions and authorises projects aligned with national interests.
He said the creation of an Article 6 Technical Committee ensures cross-ministerial coordination and evaluates the impact of cooperation agreements on emission reduction, sustainable development and financial resource mobilisation.
Matias Ryberg of Neyen Consulting said Article 6 introduces multiple options for cooperation towards achieving the NDCs and higher ambition, while Article 6.2 of the Paris Agreement allows countries to collaborate to achieve their climate change targets through carbon trade.
“The Paris Agreement requires from all participants the ability to produce national inventories and track progress towards NDCs, which implies that exporting and importing carbon credits (ITMOs) becomes part of the NDC accounting.
“The anticipation was that parties would reach an agreement on these rules during COP28; however, they were unable to finalise a decision. Ideally, if approval is achieved at COP29, the commencement of related trades could feasibly begin by 2025. It is projected that the initial methodologies adopted under this mechanism will probably be adaptations or evolutions of those already established under the Clean Development Mechanism (CDM).
“Article 6 does not directly regulate Independent Carbon Programmes (ICP), which means that in principle, carbon credits can be marketed without referring to Article 6. Indeed, these programmes have their ecosystem of standards, project promoters, and verifiers to ensure that emission reductions are real and measurable,” he added.
