Nigeria’s $3 billion Target and the Global Carbon Economy

SOStainabilityWeekly

Edited by Oke Epia, E-mail: sostainability01@gmail.com  | WhatsApp: +234 8034000706

Trends and Threads

Imagine a system where a company that cuts down fewer trees, builds cleaner energy plants, or reduces industrial pollution can earn money for doing so, and another company with unavoidable emissions can buy those ‘savings’ as credits to offset its own carbon footprint. That, in simple terms, is what a carbon market does. It puts a price on carbon dioxide and other greenhouse gases, turning the act of reducing pollution into a tradable, valuable commodity. For Nigeria, this is not just an environmental story. It is an economic opportunity. With one of the largest forest wetland ecosystems in Africa, vast agricultural lands, enormous renewable energy potential, and a young population desperate for jobs and prosperity, Nigeria is sitting on a goldmine of potential carbon credits. The country is now formally reaching for that opportunity.

In 2025, President Bola Tinubu approved the National Carbon Market Framework (NCMF), activated the Climate Change Fund, and reinstated the National Council on Climate Change (NCCC) into the national budget. These decisions signal Nigeria’s most serious attempt yet to participate in the global carbon economy and potentially unlock $3 billion every year in carbon finance over the next decade. But as exciting as this sounds, a policy announcement is just the beginning. The harder, more important work lies in building the systems, rules, institutions, and confidence that will make this framework actually deliver on its promise.

What the National Carbon Market Framework Seeks to Do

The NCMF is Nigeria’s blueprint for accessing the global carbon trading system. At its core, the framework establishes rules for how Nigeria will generate carbon credits, who can participate in the market, how credits will be traded, and how revenues will be managed. Let us break this down into plain language. A carbon credit represents one metric tonne of carbon dioxide that has been reduced, avoided, or removed from the atmosphere. If a company plants trees that absorb CO₂, invests in solar energy that replaces dirty diesel generators, or captures methane from a waste dump, it can earn carbon credits for those actions. Those credits can then be sold to companies elsewhere in the world that are trying to meet their emission reduction targets. Nigeria’s framework engages with two main types of carbon markets. The first is the Voluntary Carbon Market (VCM), where companies and organizations voluntarily buy carbon credits to offset their emissions, often as part of sustainability or ‘net zero’ goals. The second operates under Article 6 of the Paris Agreement, the international architecture for countries to trade emission reductions between themselves — a government-to-government mechanism with stricter rules and higher standards. Nigeria currently has 57 registered voluntary carbon projects, mostly in household energy, renewable power, and forestry. The government has already issued 5.8 million carbon credits through these projects. The NCMF aims to rapidly scale this pipeline while building the institutional backbone needed for the more demanding international market.

The Ambitious $3 Billion Target

The NCMF’s headline target is striking. Nigeria aims to generate up to 124.7 million tonnes of CO₂ equivalent in emission reductions by 2030 and unlock between $2.5 billion and $3 billion in market value through carbon finance. Nigeria has come a long way from simply signing international climate agreements and doing little else. The framework acknowledges Article 6 of the Paris Agreement, creates a roadmap for a national carbon registry, and signals the government’s willingness to use market-based tools to fight climate change. But there are significant gaps between ambition and architecture as the country faces serious regulatory gaps, limited technical capacity, and the absence of a comprehensive framework to guide market development. These concerns have been expressed by experts who understand precisely what stands between ambition and delivery. They argue that implementation is left largely to ministerial discretion, memoranda of understanding, and the goodwill of participating institutions. The NCMF leans heavily on voluntary carbon markets, where participation is entirely optional and largely driven by corporate reputation or sustainability pledges. While voluntary markets are a useful starting point, they are inherently limited in scale, price stability, and enforcement rigor. The regulated, compliance-based carbon market, where companies are legally required to reduce emissions or purchase credits, is vastly larger and growing rapidly in global market share. Countries like South Africa and Kenya are already moving towards compliance-based systems anchored in law. Nigeria’s framework does mention a future domestic emissions trading system, but it remains vague on timelines, sectoral coverage, and enforcement mechanisms for that transition.

The Methane Question and Probable Solutions

Nigeria is one of the world’s largest sources of gas flaring, the burning off of natural gas during oil extraction. These flaring releases methane, which is around 80 times more potent than CO₂ as a greenhouse gas over a 20-year period. Yet the NCMF gives insufficient attention to methane capture and reduction as a priority sector for carbon credit generation. Adressing gas flaring alone could generate an enormous volume of high-quality carbon credits, attract significant international investment, and simultaneously improve air quality for communities that have suffered from decades of pollution. The good news is that these weaknesses are not irreversible. Nigeria is still in the early stages of building its carbon market, which means there is time to get the foundation right. One of the most common complaints from carbon project developers in Nigeria is that the rules are unclear. What projects qualify for carbon credits? What sectors are eligible? How does a developer obtain the letter of no objection needed to trade credits? What standards must a project meet to earn government authorization? The lack of clear answers to these questions has stalled actual market activity even as policy ambitions have grown. Nigeria must publish a detailed, publicly accessible manual of procedures that spells out exactly how to participate in the market, step by step, without requiring insider connections or expensive foreign consultants. Transparent rules also mean publishing information about which projects have been approved, which have been denied and why, and what the government’s criteria for authorization are. Carbon markets only attract serious, reputable investors when the rules of the game are clear and consistently applied. There is a need to build solid MRV (Measurement, Reporting, and Verification) structures as the backbone of any credible carbon market. Here is the simple reason why: the entire value of a carbon credit depends on the claim that a specific amount of CO₂ was actually reduced or removed. If you cannot measure it accurately, report it honestly, and verify it independently, the credit is worthless or worse, fraudulent. Nigeria faces significant capacity gaps in MRV. Many government officials and local project developers lack the technical training to design proper baseline measurements, track emissions reductions over time, and prepare reports that meet international standards. The country has been over-reliant on expensive foreign consultants to fill this gap, which raises costs and creates dependency. The government must urgently invest in building local MRV capacity: training Nigerian engineers, environmental scientists, and data analysts; establishing sector-specific MRV methodologies for forestry, agriculture, energy, and waste; and deploying digital monitoring technologies that reduce the cost and time of verification. A national MRV framework backed by law and overseen by a competent independent body is not optional; it is the foundation of the entire system.

Placing Communities at the Centre

One of the most repeated criticisms of carbon market development in Africa is that it often happens to communities rather than with them. Developers negotiate deals with national governments, credits are issued, revenues flow to corporate accounts, and the local communities whose forests, land, and labour made those credits possible see little to none of the benefit. Nigeria must build genuine community inclusion into the DNA of its carbon market, not as a box-ticking exercise but as a structural requirement. This means requiring all carbon projects to conduct free, prior, and informed consultation with affected communities before registration. It means establishing clear, legally mandated benefit-sharing arrangements that direct a defined percentage of carbon revenues to host communities. And it means creating grievance mechanisms through which communities can raise concerns and expect real responses. Beyond communities, meaningful stakeholder engagement must also extend to civil society organizations, academic institutions, private sector players, and state governments. Carbon governance cannot be a closed-door conversation between the federal government and a handful of international investors.

The Corruption and Greenwashing Risks

Carbon markets are vulnerable to corruption, double-counting, and greenwashing, a situation where organizations claim environmental benefits that are exaggerated or entirely fictitious. These risks are particularly acute in countries with weak institutional frameworks and high levels of discretionary decision-making. The voluntary carbon market has been scarred by scandals in recent years, projects that claimed to save forests that were not actually threatened, carbon credits issued for emissions reductions that never happened, and communities displaced in the name of conservation without compensation or consent. These scandals have damaged confidence in the market globally, and international buyers are now more demanding than ever about the quality and integrity of the credits they purchase. This is why Nigeria must adopt and enforce rigorous reporting and auditing standards across its carbon market. Every carbon project should be required to submit regular, standardized reports on its emissions reductions. These reports should be independently verified by accredited third-party auditors, not just any consultant, but verifiers who meet international standards set by bodies like the Integrity Council for the Voluntary Carbon Market (ICVCM). The government’s proposed national carbon registry is a step in the right direction. But a registry is only as good as the data that feeds into it. Nigeria must ensure that registration and credit issuance are contingent on credible, independently verified data and that false reporting carries real legal consequences.

Nigeria’s potential in carbon markets is significant. The Niger Delta’s forests and wetlands, the country’s vast agricultural landscapes, its massive problem of gas flaring, its growing renewable energy sector, and its enormous urbanizing population all represent categories of carbon mitigation that international buyers are actively seeking. According to BloombergNEF, global carbon credit supply could expand 20 to 35 times by 2050, driven by reforms focused on transparency and environmental integrity. Countries that build credible, transparent, and inclusive carbon markets now will be positioned to capture disproportionate shares of that growing demand. The country already has some skin in the game even if tangentially. For example, the Nigeria Sovereign Investment Authority (NSIA), through a joint venture with global energy trader Vitol, committed an initial $50 million to invest in high-integrity carbon avoidance and removal projects.

Nigeria Climate Investment Summit London

Nigeria’s vast carbon market opportunities are up for showcase at the Nigeria Climate Investment Summit (NCIS) during this year’s London Climate Action Week. Convened by SOStainability and GLOBE Legislators – the Focal Point of the UNFCCC Parliamentary Group, the summit is designed precisely for the kind of structured, high-level dialogue that can accelerate the transition from climate policy ambition to investable action. The summit is not just a showcase: it is a signal to the world that Nigeria’s market is open for credible, transparent, and mutually beneficial business. And pertinent entities, including federal and subnational governmental bodies, private sector players, and foreign investors, are already signing up to engage in June in London.

Washing and Hushing

From CNG to Electric Vehicles: Leapfrogging a Crawling Presidential Initiative

Nigeria is quick to make policy but slow on implementation. And even slower in course-correction. This is why last week’s announcement that President Bola Tinubu has approved the expansion of the mandate of the Presidential Initiative on Compressed Natural Gas (CNG) to include Electric Vehicles (EV) did not elicit much cheer. On the surface, it is a bold climate policy, but action often speaks louder than words.  

For context, Nigeria is not short of climate and environmental protection policies. The country has a 2060 carbon neutrality pledge, enacted a landmark Climate Change Act in 2021, and crafted one of Africa’s most ambitious Energy Transition Plans, etc. The challenge is often connecting the dots in coordination. This is why this policy move on CNG and EVs should be taken with caution, especially given that the transport sector is not a footnote in the country’s emissions story but a chapter that demands urgent rewriting. According to the International Energy Agency (IEA), transport accounts for around one-fifth of global CO₂ emissions, or 24 percent for only energy-related CO₂ emissions. Road travel alone accounts for three-quarters of all transport emissions, making it the single largest contributor within the sector. Africa’s largest economy has one of the world’s most fuel-dependent transport ecosystems, with millions of ageing petrol vehicles choking its cities, generating particulate matter that kills quietly and consistently. Lagos alone, the commercial heartbeat of the country, ranks among the world’s most air-polluted megacities. The health costs are staggering and disproportionately borne by the poor.

Launched in 2023, the Presidential CNG Initiative was partly a cushion against the shock of the sudden removal of petrol subsidy and as a pivot toward cleaner fuel. Nigeria holds over 200 trillion cubic feet of natural gas reserves, one of the largest in the world. This endowment makes CNG a logical bridge fuel: cheaper than petrol, domestically abundant, and significantly less polluting at the tailpipe level. The CNG initiative aligns with Nigeria’s Energy Transition Plan (ETP), which designates gas as a transitional fuel while projecting a shift towards electrification in the long run. The ETP envisions electric vehicles driving approximately a 97 percent reduction in transport-sector emissions by 2060, an extraordinarily ambitious target that requires the groundwork to begin now, not in 2040. Every year of delay in establishing EV charging infrastructure, in developing local assembly capacity, in creating consumer financing pathways, is a year that makes 2060 harder to reach. It is therefore understandable that the presidential initiative set an ambitious target of converting one million vehicles to run on compressed natural gas and began deploying conversion centers and refueling stations across the country. But implementation soon ran into the predictable walls: a shortage of refueling stations outside of major urban centers, an underdeveloped conversion kit supply chain, high upfront costs that deterred the average driver, and an unreliable gas supply infrastructure. Without adequately addressing these challenges, the government has decided to widen the mandate of the presidential initiative. On the surface, this expansion tends to connect Nigeria’s immediate economic pressures and its long-term environmental commitments. By housing both CNG and EV mandates under a single coordinating body, there is a suggestion of a coherent national clean mobility strategy, one where policy signals, infrastructure investments, and financing instruments speak to each other rather than operate in silos. But certain critical questions must be answered.

Power, Affordability, and Local Content Challenges

It is tenuous to pursue a national EV strategy in a country with a broken power supply. Nigeria’s electricity grid remains profoundly unstable, with grand-scale collapses occurring with alarming regularity. This is on top of the fact that an estimated 40–45 percent of the population is still without access to the grid. If Nigerians charge their EVs on diesel generators, which is what will happen in the absence of a reliable public power supply, the emissions benefit evaporates. The EV strategy must be twinned, inseparably, with an aggressive grid-stabilization and renewable-energy deployment plan. Otherwise, we are selling the dream of clean transport while delivering a diesel-powered imitation. The directive explicitly acknowledges that conversion kits and financing must be accessible to ordinary Nigerians. This is correct and necessary. But the history of Nigerian government financing programmes, from agricultural credit schemes to small business funds, is a history of leakage, inaccessibility, and elite capture. The announced partnership with CreditCorp Nigeria and other financial institutions must be structured with rigorous accountability mechanisms, with specific targets for low-income beneficiaries, and with transparent monitoring of uptake. Affordability declared is not affordability delivered. Will Nigeria’s EV rollout primarily benefit foreign manufacturers and importers, or will it catalyze domestic assembly, local battery technology, and indigenous supply chains? The economic opportunity embedded in an EV transition is enormous, but only if Nigeria positions itself as a participant in the value chain and not merely a market for finished goods.

Accountability Before the Next Big Leap

Before Nigeria’s clean transport conversation leaps forward to electric vehicles, it must first reckon honestly with what it has already started and not yet finished. The CNG initiative was touted as a move to reduce transportation costs, clean up the air, and stimulate development across the gas value chain. In June 2025, the House of Representatives launched an investigation into the implementation of the scheme with a committee mandated to assess the safety, viability, and sustainability of the programme, determine whether CNG conversion centres had been equitably distributed across the country’s six geopolitical zones, and review the adequacy of existing regulatory and legal frameworks governing the rollout. The committee promptly raised pointed questions about how a ₦500 billion palliative fund had been spent. It also challenged the authenticity of a ₦760 billion private sector investment claim amid uneven infrastructure distribution, inadequate technical training, and whether proper environmental impact assessments had been conducted. This was not a routine oversight check; it was a formal signal from the legislature that something had gone wrong, or at the very least, that key questions remained unanswered. There are no answers to these questions yet.

This pattern of ambitious announcement, weak implementation, and suspended accountability is precisely what Nigeria cannot afford to repeat as it now sets its sights on electric vehicles and a broader clean transport agenda. The EV transition is worth pursuing. The carbon market opportunity is real. The climate investment narrative is compelling. But none of it will be believed by international investors, development finance institutions, or the Nigerian public if the government cannot first demonstrate what happened to the CNG billions, why conversion centres remain geographically uneven, and who is responsible for the gaps between the policy on paper and the reality on the ground.