Carbon trading and the policy enablers for Nigeria

Carbon trading or emissions trading is a market-based system or approach used in reducing anthropogenic greenhouse gas emissions—particularly carbon dioxide—into the atmosphere. Of all the greenhouses gases emitted, carbon dioxide is the most prominent due to its distinctive persistence: its concentration in the atmosphere has risen since the start of the industrial revolution because its […]

Carbon trading or emissions trading is a market-based system or approach used in reducing anthropogenic greenhouse gas emissions—particularly carbon dioxide—into the atmosphere. Of all the greenhouses gases emitted, carbon dioxide is the most prominent due to its distinctive persistence: its concentration in the atmosphere has risen since the start of the industrial revolution because its atmospheric lifetime is between 50 to 200 years—that is, the time it takes for carbon dioxide to either take part in another chemical reaction to give a new product, or be absorbed by a sink.

A major turning point for carbon trading was achieved by the enactment of the Conference of the Parties—COP, especially at the Kyoto Protocol of 1997 and at the Paris Climate Agreement of 2015. In response to the Kyoto Protocol, international market for tradeable carbon was created addressing two main themes: to explain the concept of tradeable permits to industrialists, policy makers and the lay men on the one hand, and to anticipate the evolution of the market on the other hand.

The United Kingdom is first amongst countries in designing a carbon trading system and in implementing taxation to encourage energy efficiency. France has introduced strict taxes on the carbon content of electricity and fuels, while Germany, after the Green Party assumed political power, has promoted renewable energy—although with little attempt to link national policy and greenhouse gas output. Conversely, the Paris Climate Agreement started out to achieve, for the first time in over two decades of the United Nations negotiations, a universal agreement on climate that is binding on all nations of the world. The outcome was that all participating countries numbering 196 agreed to the call for action against climate change—centering on reducing greenhouse gases as soon as possible by keeping surface temperature to well below 2 degrees centigrade. But when faced with a greater threat of a planet in peril than other nations, countries as Seychelles, the island states of the Pacific, and the Philippines, whose very existence are at risk of elimination had gone the extra mile to vote for a goal to reduce surface temperature by 1.5 degrees centigrade as opposed to the earlier 2 degrees centigrade.

While Africa’s share in the global energy system is a minor measure by today’s emissions in volume terms, the increasing growth in population and developments on the economy imply that this situation cannot remain insignificant in the long term. Long term energy-system developments in Africa is a driver for potential global climate policy which indicates an impending and active role for Africa in the wider global energy system, and hence, global climate mitigation strategies. Although several countries on the African continent are large exporters of oil and natural gas, some research projections suggest that by the mid-21st century, and for Africa to grow rapidly to meet the domestic demands, it will need to use up most of its natural resources, indicating decreased exports of current energy commodities. But more than ever, the rapid expansion of Africa’s energy systems will imply that the continent stands to gain significance in global climate change mitigation initiatives. To this extent, a major challenge will be to align increasing investments within the energy system with climate policy vis-à-vis potential revenues that will accrue from international carbon trading.

Nigeria is an occupier of a momentous status as Africa’s most populous nation with its reported population figure of over 180 million or thereabouts. According to data from Trading Economics, carbon dioxide emissions from Nigeria amounts to 96281 kilotons in 2014, which is in line with the World Bank collection of development indicators, compiled from officially endorsed sources. The carbon dioxide emissions are those coming from the burning of fossil fuels, and heavy industries such as cement manufacturing. Within these industries, carbon is produced during the consumption of solid, liquid and gaseous fuels, as well as in gas flaring.

Thus, carbon trading can be achieved in Nigeria for both medium and long-term objectives. Attempts can be made to facilitate it in a way that countries richer than Nigeria can cut their emissions by offsetting costs that accrue in the development of carbon lowering schemes in countries poorer than Nigeria. The cap and trade schemes can also be utilized at both regional, national and international levels. This is realizable by earmarking an overall cap or limit on the volume of emissions allowed from significant point sources which will consider industries such as power, automotive and aviation. The Nigerian government can then hand out permits up to the agreed limits which can be given either as free or auctioned to companies within respective sectors. When any given company cuts back its carbon significantly, the excess can be traded in the carbon market to earn money. But if a company is not able to curb its emissions, then extra permits will be bought.

But as much as there are intrinsic worth in the carbon trading system, contrary discourses that argue on the universal effectiveness of markets in addressing social and environmental problems has shown it to be unfitting for climate change mitigation. Experience learned from pollution trading in the United States shows an argument can be advanced for, rather than against, making carbon markets the focus of global warming actions. Against this backdrop, carbon markets, are perceived in some quarters as particularly disastrous examples of what may occur when the mass of processes normally associated with neoliberalism is left unfettered on environmental crises.

Over the past decade or more, the tremendous contradictions of climate markets in the face of a continuous shape-shifting has only achieved increased intensity because new equations proliferate. Beyond these, market actors, regulators, technological complexes, grassroots resistance networks, biogeochemical systems, forests, etc., all make their plays. In consequence, the questions to be asked considering these dynamic is how the most effective possible movements can be constructed to address climate threats being posed by the carbon markets themselves. Therefore, it seems that the future of carbon markets must rely on two main themes; first, those regulations that limits commodification—which will imply that some considerable chance exists in restricting the damage that carbon markets pose—or second,strategizing to force policymakers to phaseout carbon trading in the longer term.