Carbon credit scheme: Pathway to funding Nigeria’s adaptation plan, By Adeoye Adekunle

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Climate change has become a topic of interest globally because of its current and potential impact on the economy, livelihoods, and the environment. Like other sectors, agriculture emits greenhouse gases directly and indirectly (across the three emission scopes i.e. scopes 1, 2 and 3). Beyond emitting greenhouse gases, agriculture also suffers the effects of these emissions, which have ripple effects on the stakeholders across the agricultural value chain (reduced productivity and profitability), the consumers (reduced availability and affordability of food products), the government (reduced internally generated revenue and foreign exchange potential), and the planet (reduced biodiversity and increased extreme weather events).

As contained in Nigeria’s revised Nationally Determined Contribution, the agricultural sector contributed 15.7 per cent to the national greenhouse gas emission in 2018. As a way of meeting the Federal Government’s target of a 60 per cent to 75 per cent greenhouse gas emission reduction by 2030, the elimination and mitigation of greenhouse gas production must be implemented concurrently. Agriculture/agroforestry are some of the few activities that can actively mitigate and eliminate greenhouse gases simultaneously.

The Federal Government of Nigeria envisaged that funding for the National Adaptation Plan for climate change would come from three main sources: Budgetary allocation from the federal and possibly state governments, international support, and private sector financing. This article will provide valuable insights into how the private sector and international development agencies can provide funding for the National Adaptation Plan, while offsetting their unavoidable emissions.

In developed countries with emission production cap per industry, emission-producing firms are mitigating their emissions through the adoption of green energy, reduced fossil fuel burning, and buying carbon credit. 

Carbon credit

 allows firms that cannot avoid greenhouse gas emissions to compensate for their emissions. The compensation goes to firms that are significantly reducing their emissions and those capturing and storing the emitted carbon. In Nigeria, carbon credit is still at the ideation stage, hence all hands need to be on deck to achieve a robust voluntary carbon market. 

How can the local private sector and international development agencies provide sustainable funding for climate action in Nigeria?

Currently, private organisations, especially manufacturing companies, are gradually adopting sustainable production measures to reduce GHG emissions. This gradual adoption can be attributed to strong advocacy on sustainable production, plastic waste recycling and usage of biodegradable materials for packaging by climate action organisations.

Moving forward, private sector organisations need to measure or estimate their annual greenhouse gas emissions and set for themselves ambitious emissions reduction targets and plans. A viable and excellent emission reduction plan is the voluntary carbon market (since Nigeria does not have a compliance market). A 

voluntary carbon

 market is where individuals or organisations can buy carbon credit from an independent crediting scheme to offset their carbon footprint without coercion. By offsetting the greenhouse gas (CO2e) emission, the private sector is providing funding for local actors involved in carbon harvesting and storage to motivate and expand the scope of their climate action. In the long run, this will contribute to the Federal Government’s National Adaptation Plan. 

Multiple international development agencies and foundations are already funding projects to improve sustainable food production and strengthen climate resilience through the development of clean energy and early warning systems. In addition to the current efforts, international development agencies, in partnership with the National Council on Climate Change (NCCC) need to take a step further to encourage carbon removal projects, coordinate the voluntary carbon market and certify the ensuing carbon credits. This will regulate the space and increase the credibility of the generated carbon credits amongst the stakeholders. It will further motivate the stakeholders to indulge in carbon storage activities and help organisations achieve their ambitious net-zero emission targets.

In June 2023

, 16 companies from Saudi Arabia bought up to 2.2 million tonnes of carbon credits at an auction organised by the Regional Voluntary Carbon Market Company. Each carbon credit is measured in metric tons and the purchasing companies paid $6.27 per metric ton. The credits were obtained from renewable energy and tree-planting projects in Kenya, Egypt, Rwanda, and South Africa. The credit is part of the strategic plan of the companies to offset their emissions to achieve net-zero emissions

Nigeria has multiple strategic advantages to aid local and international organisations in achieving their net-zero emission goals. This can be done through tree planting (carbon storage in the woody biomass and root), carbon sequestration by adopting climate-smart food production (including fodder production), clean energy generation and other means.

The production of credible carbon credit requires a set of policies that will foster a favourable environment for carbon offset projects, enhance transparency, and encourage the participation of stakeholders in emission reduction. As a matter of urgency, the National Council on Climate Change needs to consider the following policy recommendations.

Comprehensive Regulatory Framework: Create a transparent regulatory framework that outlines the acceptable methodology for carbon storage and the rules, standards, and procedures for participating in the voluntary carbon market.

Verification and Certification Standards: Adopt and promote globally recognised carbon credit verification standards, such as The Gold Standard. This will strengthen the credibility of the generated carbon credits.

Incentives for Carbon Credit Project Developers: Provide incentives such as increased access to inputs, and reduced import duties on inputs that are critical to carbon reduction/storage such as afforestation, renewable/clean energy and sustainable food production.

Capacity Building and Stakeholder Engagement: In partnership with the Ministries of Environment and Agriculture and Food Security, facilitate training, workshops and awareness campaigns targeted at carbon credit project developers, local and international organisations on the need to participate in carbon credit and offsetting schemes.

Data Management and Reporting: Enforce transparent and standardised emissions reduction methodology and reporting to promote accountability and effective monitoring of the voluntary carbon market’s impact.

Limited awareness: The key stakeholders that are required for a functioning carbon market are not aware of the enormous benefits of carbon credit trading. The Federal Ministry of Environment should champion an awareness workshop and campaign designed to educate and influence these stakeholders to adopt a voluntary carbon credit scheme.

Credit verification challenges: Carbon credit is faced with several challenges globally, two of which are soil organic carbon reversal and leakage. The NCCC, in partnership with climate action-inclined development agencies, need to develop a holistic verification and certification approach that will uphold the integrity and reliability of the generated credits by preventing leakages and reversals among others.

The Nigerian National Adaption Plan is very critical to achieving the nation’s ambitious emission reduction target. A robust and strategic partnership between stakeholders, most importantly between the government, private and development partners, is key to achieving the ambitious target.

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