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FG moves to establish blueprint for emissions trading scheme

By Chinedum Uwaegbulam
29 August 2022   |   4:41 am
Determined to contribute towards global effort to limit global temperature rise to well below two degrees Celsius, the Federal Government has commenced activities that would lead to the establishment of the Nigeria Emissions Trading Scheme (ETS).

Director General, National Council on Climate Change,Salisu Dahiru (left); Resident Representative, United Nations Development Programme (UNDP), Mohammed Yahya; Minister of Environment, Mohammed Abdullahi; UNDP international consultant, Robert Ondhowe and Permanent Secretary, Ministry of Environment, Hassan Musa during business meeting to flag-off the development of Nigeria Emissions Trading Scheme in Abuja.

• Targets 250 metric tons of CO2e yearly worth $3 billion

Determined to contribute towards global effort to limit global temperature rise to well below two degrees Celsius, the Federal Government has commenced activities that would lead to the establishment of the Nigeria Emissions Trading Scheme (ETS).

The global carbon trade had in a short space of time grown into a market worth over $175 billion a year. Market-based options for the reduction of greenhouse gas emissions remain a practical strategy to meet net-zero target.
According the data available from World Atlas, as at 2020, Carbon Dioxide (CO2) emissions for Nigeria were about 126,9 million tonnes coming mainly from burning of fossil fuel and heavy industries such as the cement manufacturing.
Under the scheme, the ministry will impose a limit (cap) on the total emissions in one or more sectors of the economy and issue a number of readable allowances that does not exceed the level of the cap. Each allowance corresponds to one unit of emissions (one tonne).
Hence, the Federal Government’s initiative through the Federal Ministry of Environment to take the lead on the scheme, with legal framework in the Climate Change Act of 2021 for the reduction of greenhouse gas emissions through a cap and trade-based emissions trading schemes to meet the net-zero target.
Consequently, the ministry’s Department of Climate Change in collaboration with United Nations Development Programme (UNDP) organised a Business Meeting in Abuja, last week, to flag-off the development of Nigeria’s emissions trading framework, which was attended by senior officials of government and agencies, as well as private sector.
In his opening remarks, Minister of Environment, Mohammed Abdullahi, recalled that Nigeria signed the Paris Agreement with the goal to limit global warming to well below 2 degrees Celcius, and preferably to 1.5 degrees Celsius, compared to pre-industrial levels in addition to reducing global greenhouse gas emissions as soon as possible to achieve a climate-neutral world by mid-century.
He said government has demonstrated political will with the signing of the National Climate Change Act intended to support government’s net zero agenda.
“A collective investment in addressing climate change would eventually provide immense dividends for the global economy alongside the economic co-benefits that come with it. Nigeria realises that its efforts on carbon management policy stands to gain from aligning our national emissions planning to international mechanisms such as ETS.
“If we succeed with this, Nigeria positions itself as the leading regional carbon trading centre and will positively impact our environment and economy,” he said.
Abdullahi said the ministry recognises the importance of the involvement of all stakeholders across sectors in the ETS and positioned to provide coordination at all levels required to galvanise, as well as entrench climate action for the country.
The ministry, he said, is “poised to explore all options that are driven by our domestic realities and yet in tune with global benchmarks and best practices to ensure the development of a scheme that adds value to the environment, trigger bankable and commercial transactions, which will ultimately generate jobs.”
UNDP Representative, Mohammed Yahaya, said the event is the foundation of future carbon markets to achieve Nigeria’s climate action, which is vital to the collective efforts to implement the Paris Agreement and advancing 2030 Agenda for Sustainable Development.
“The global carbon trade had in a short space of time grown into a market worth over $175 billion a year. The history of carbon markets can be marked as a great political success story and is today an integral part of international climate change policies across the world.
“Carbon credits are provided for activities that claim to benefit the climate either by removing CO2 from the air or preventing it being emitted in the first places, Carbon trading is the procurement of these credits. This is what has given birth the Emissions Trading Scheme or Systems,” he said.
For a country like Nigeria, he said, carbon trading should be looked at for both medium and long term objectives, which would provide lot of environmental benefits to the country.
He said in some countries, carbon emission trading has been known to be source of means of generating money for nature-based solutions to climate change, this believe, can be said to be the same for Nigeria in the nearest future.
“We would need to take critical look at all sectors, especially the transport, energy and the construction sectors. These are the sectors in which emissions are actually shooting up instead of going down despite the improvement in technological innovations and advancement.     
“These are the areas that affect the ordinary Nigerians on daily basis. It would be nice if we are able assist those who know what they need to do by giving them the right incentives and protecting the vulnerable against the consequences,” Yahaya said.
According to him, emissions trading give flexibility to governments to deal with vested interests and allow governments, as well as decision makers to focus on the acceptability of the initial allocation in both domestic and international contexts. “Emissions trading systems expose emitters to the external costs of emissions in the most flexible and least costly way.
The Director General, National Climate Change Council of Nigeria, Dr. Salisu Dahiru, said this is one of the proactive steps that development partners are supporting to ensure Nigeria meets the Paris Agreement, adding that the success rests on three major ingredients – capacity, technology and finance.

“A country that succeeds in climate change is the ones that are supported by development countries or partners. For Nigeria, the inroads we recorded under the reduce emissions from deforestation and forest degradation in developing countries (REDD) programme was largely due to the support from UNDP.
“Today, the ETS is the game changer for Nigeria being the largest economy in Africa and with highest population, which is an asset. We see it as challenges and opportunity for innovation. Transport and are heavy emitters in Nigeria and with emission ETS in place, it means a complete U-turn from a net emitter to a net climate resilient leader. Whatever emissions you are doing, you are now turning them into assets and additional revenue, additional capacity, additional opportunity for innovation because once you put this in place, it’s like you are saying you’re putting a cap unto what is being emitted, and any emitter above the cap pays a penalty or forced to adjust his technology or his system of operation so as not to emit above that cap.

“And that is where you create the value chain. At every point you’re doing this, technology is coming in, investment is coming in, jobs are being created, a cleaner environment is being established. And then, the savings that he has done will now be traded upon as carbon credit for him to refinance and offset the cost that he has invested in making those changes,” he said.
The Climate Change Policy Manager, British High Commission, Adesuwa Obasuyi, who was elated that Nigeria is taking this important milestone ahead of COP27, said the era of carbon offsetting delaying meaningful climate action is over, adding that transparent, reliable markets will play a role in this new era.
She said: “One of the key outcomes of COP26, which the UK hosted in Glasgow in 2021 was the agreement on Article 6 which is the Paris Agreement’s rulebook governing carbon market mechanisms – to support cooperation between countries in transferring emissions reductions and as a way to stimulate private sector investment in climate action.”  
She said the UK has been supporting various initiatives aimed at strengthening Nigeria’s ambition to tackle climate change and carbon markets play a key role in tackling climate change, as it is a way to raise finance to meet NDCs, which can enable countries like Nigeria go further in   agriculture, transport sectors and strengthen adaptation, as well as resilience to climate change.