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FG to introduce carbon tax system in Nigeria

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By Timothy Akintola

Tax to help in the generation of revenue as well as switching from fuel use.

Nigeria has been consistently hit by climate change crisis such as excess flood, impacting the agricultural activities and affecting the personal lives of most people. Drought has also tainted the socio-economic growth and projected to be immensely serious in the future, due to the climate change situation. Climate change have affected Nigeria in areas such as food shortage and low crop yield. The Northern part of the country is in fact at risk from climate change, with intensified wind erosions sweeping away houses and farms.

In light of the climate situation, Salisu Dahiru, the Director General of the National Council on Climate Change (NCCC) revealed that the federal government has concluded on its plans to introduce a carbon tax approach and budgetary system in Nigeria, a policy which is in line with the globally approved Energy Transition Plan and a part of the Climate Change Act. This was revealed after his meeting with President Muhammadu Buhari at the presidential villa. He said that the agency had obtained the federal government’s approval to initiate important deliverables such as the establishment of a carbon budget, as recommended in the Climate Change Act.

Government to set tax prices that emitters would pay per gas emission.

President Muhammadu Buhari was reported to have approved the Energy Transition Plan at a recent meeting that took place in Abuja. This approved plan was scheduled to be overseen by the National Council on Climate Change, in line with the Climate Change Act 2021. The Carbon tax or Greenhouse Gases have been explained in two broad forms; an emission tax which is based on the quantity being produced by an entity and tax on services that are generally greenhouse gas-intensive like a tax on gasoline. It was however revealed that the Government would set the tax prices that emitters would pay per ton of greenhouse gas emissions.

Salisu further explained that the tax would be very important in enhancing revenue generation, as well as encouraging people to be conscious of the climate situation by switching from the use of fuel, whilst adopting new technologies to reduce emissions. He noted that allowances would be provided for every government and private entity to determine how much emission they can produce and exceeding this limit would attract punishments which will be contained in another deliverable that the Climate Change Act recommends.

NCCC cautious in its compliance of the Climate Change Act requirements.

He added that this was designed to develop a scheme for a carbon tax system with the implementation of projects in the country. These projects, Salisu explained, would be capable enough to reduce the overall greenhouse gas emissions. He said that the emission reduction harvest would be contained in an emission reduction certificate, translated into carbon credits and sold to potential buyers in or outside the country. He revealed that the secretariat had been instructed by the council to design a framework for carbon trading and carbon change fund to serve as the main revenue source for running the council and managing projects that would assist the country in the fulfillment of its national contributions.

The Director General has indicated that whilst some of these activities had been mentioned in the Climate Change Act 2021, there was a need for the council to sign of on these activities, including the operationalization of the office. He stated that the council was careful in its dealings to promptly comply with the requirement of the Climate Change Act. On the gas flaring situation, Salisu stated that the council was also saddled with the mandate of implementing the energy transition plan which would be used as a launchpad for capturing the needed gas.

Federal government working to implement the ETP for its multiple benefits.

It was also revealed that the federal government was working on the implementation of this ETP for its multiple benefits which include the energy gap reduction and enhancing the economic utilization of gas. With industries shifting from the use of diesel to natural gas, economic growth and employment. Presently, With Nigeria reported to have earned about $4.8 billion from non-oil exports in 2022, the Nigerian Export Promotion Council indicated its commitment to ensuring an improvement from 2022.

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