Nigerian Govt. develops carbon pricing system, sets to charge high greenhouse gas emitters

Oredola Adeola

The Nigerian Government is set to introduce a carbon tax and budgetary system for the country aimed at individuals and companies with high greenhouse gas emissions including energy generators and heavy industries.

Salisu Dahiru, Director-General (DG) of NCCC, made this known on the sideline of the recent meeting with President Buhari at the State House, Abuja, when the NCCC obtained the approval to initiate key deliverables contained in the Climate Change Act, including the establishment of a carbon budget for the country.

The Government through its agency is expected to impose charges to be paid by those that burn beyond a certain carbon emission limit, especially by primary emitters of carbon including diesel, petrol, and other goods and services that releases carbon emission and greenhouse gas responsible for climate change.

The International Monetary Fund (IMF) said that a price of about $75 per tonne of carbon dioxide would be needed by 2030 to meet the goal of staying within 1.5C to 2C of global heating, set under the Paris agreement in 2015. It added that the average price is only $3 a tonne for those emissions that do fall under form of price.

EnergyDay gathered that carbon pricing can take many forms in practice, from taxes on fuels to carbon trading systems, such as that operated by the EU, under which businesses are allocated or must buy tradable permits to produce carbon dioxide, with laggards forced to buy the excess permits of those that have cut carbon fastest.

According to Dahiru, the Carbon budget in Nigeria will now provide allowances for every entity, whether government or private sector, in terms of how much emissions it may be allowed, and exceeding those emissions could also attract penalties.

The nature of these penalties, according to him are going to be contained in another deliverable that the Climate Change Act has also requested the council to do.

He further said, “NCCC would also develop a framework for a carbon tax system in Nigeria. It will also look at where projects are being implemented in the country. These projects are capable of reducing overall carbon or greenhouse gas emissions.

“The harvest of these emissions reductions are normally contained in what we call an emissions reduction certificate, which can be translated into carbon credit, and then sold to potential buyers within the country and outside.

“Under the arrangement, the Federal Government is expected to set a price that emitters pay for each ton of Green House Gas (GHG) emissions,” the NCCC DG said.

Ude Chiziterem, an Environmentalist, in a statement obtained by EnergyDay, described the carbon tax as a fee imposed on the burning of carbon-based fuels (coal, oil, and gas).

He noted that the tax is the only way to get users of carbon fuels pay for the climate damage caused by releasing carbon dioxide into the atmosphere.

Chiziterem however noted that the carbon credit is a market-based alternative that helps the government reduce the carbon footprint and also earn carbon credits and revenue to finance and mitigate climate change.

EnergyDay gathered that the Carbon tax or tax on greenhouse gases comes in two broad forms, namely, an emissions tax, which is based on the quantity an entity produces; and a tax on goods or services that are generally GHG-intensive, such as a carbon tax on gasoline.

The Nigerian Government had in June 2019 enacted the Carbon Tax Act, as a policy tool designed to accomplish the targets of a safe and healthy environment through effective regulation of the emission of pollution-generating activities into the environment as an impulse to effectively guarantee low carbon economy and also a means of diversifying source of revenue generation for the economy.

Carbon Tax Act was brought about as requisite to adjust and preserve the natural environment from the impeding danger of carbon related activities in the country and to increase diversification of revenue base for the country.

Article 13 of the Sustainable Development Goal of the United Nations was explicitly clear on the need for exigent actions to combat pollution like carbon emissions and its ensuing impacts on the environment by regulating emissions-related activities in order to promote growth developments in the face of renewable energy in Nigeria.

The proposed carbon tax by NCCC is therefore expected to aid the country’s consumption choices and investments towards low-carbon activities. It would also shift the country’s focus away from carbon-intensive activities and the source of raising revenue for growth purposes would then be applied through policies appropriate to the national context.