The Nigerian Government announced the launch of a Carbon Tax policy, to reduce overall carbon or greenhouse gas emissions and raise revenue generation in the country.
This was disclosed by the Director-General of the National Council on Climate Change (NCCC), Salisu Dahiru, on Monday when he briefed State House correspondents in Abuja.
He added that the carbon tax policy is in line with the recently approved Energy Transition Plan, citing President Buhari’s approval of the Energy Transition Plan, to be driven by the NCCC, in accordance with the Climate Change Act 2021.
Carbon Tax: He noted that the agency is to develop a framework for a carbon tax system in Nigeria and will also look at where projects are being implemented in the country, he said:
- “That is to 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 reduction is 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.”
Framework: He added the policy will be developed by the Council and will work with the Secretariat to develop the framework for carbon trading, and also to develop the framework for establishing the climate change fund for Nigeria.
This would serve as the main source of revenue and inflow of funds to be used for running the council, which would be used to undertake projects to help Nigeria fulfil all its obligations under the nationally determined contributions, as well as under the net zero target of 2016.
- “The President also endorsed the Council as the Designated National Authority for the United Nations Framework Convention on Climate Change (UNFCCC) and the DG, NCCC as the UNFCCC National Focal Point, in line with the Climate Change Act 2021.”
Gas Flaring: Dahuri added that the Energy Transition Plan, which is the first among many African countries, is predicated on the use of natural gas as the transition foil for Nigeria as the transition energy source.
- ”We know that what has been flared, is actually natural gas.
- ”So, we also know that one of the added advantages that the energy transition plan is going to have is to help to close the energy or power or electricity gap that we are experiencing in the country.
- “We are going to use the energy transition plan as the main launchpad for capturing the gas needed.
- ”If you take the population of Nigeria, which is over 200 million, and we are already experiencing shortages in terms of electricity, and utilizing this gas for even domestic use alone is something that is going to be a big positive.
- “So, the government is pursuing the implementation of this ETP as a very important project that will have multiple benefits, including reducing the energy gap.”
What you should know
A carbon tax is a fee imposed on the burning of carbon-based fuels (coal, oil, gas). A carbon tax is a way — the only way, really — to have users of carbon fuels pay for the climate damage caused by releasing carbon dioxide into the atmosphere.
It is a market-based alternative that helps the government reduce the carbon footprint and also allows them to make money as a government when there is a breach of this solemn oath to stay in check. In Nigeria, The Carbon Tax Act came into force on 1 June 2019. The carbon tax was designed to apply to direct emissions in the following categories as specified in the National Greenhouse Gas Emission Reporting Regulations.
What alternatives do most Nigerians really have in terms of using clean energy sources in the face of the current epileptic supply of electricity? The cost of solar systems is still way beyond the reach of most Nigerians, hence the continued popularity of fuel generators. Even most SMEs are struggling to afford the much cheaper fossil oil based power sources as only blue chip companies can currently afford the much cleaner and natural energy sources being touted by this council.
@Stan
Solar energy in Nigeria is currently more expensive than fossil fuels due to the government’s subsidy on petrol. This creates an artificial price difference, which limits the use of cleaner, more reliable and cost-effective renewable energy sources such as solar, and instead encourages the use of fuel generators. However, if the government removes the fuel subsidy, solar installations can become cheaper in the long term, making it a more viable option for households and small businesses across Nigeria than fuel generators.
Moreover, the government can further support the use of solar energy by using the fiscal space created by the elimination of the fuel subsidy to subsidize the cost of solar components, invest in supporting solar mini grid rollouts, and introduce regulatory changes to allow private solar energy producers to sell excess energy generated to their neighbors. These measures would increase the financial attractiveness of solar energy, stabilize the grid in the long term, and help ensure a more sustainable energy future for Nigeria.