Carbon Vista, a company co-owned by the Nigeria Sovereign Investment Authority (NSIA) and Vitol, has entered into an MoU with the Regional Voluntary Carbon Market Company (RVCMC). The RVCMC is a wholly owned subsidiary of the Public Investment Fund (PIF), the Sovereign Wealth Fund of the Kingdom of Saudi Arabia (KSA). This is according to a press statement released by the NSIA.
The signing of the MoU represents a partnership between Carbon Vista and RVCMC. The goal of this partnership is to provide Nigerian Carbon Credits to KSA and jointly invest in projects that generate trustworthy carbon credits. Additionally, the collaboration between Carbon Vista and RVCMC will encourage the use of voluntary carbon credits to support the development of a low-carbon economy.
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Aminu Umar-Sadiq, the Managing Director, and Chief Executive Officer of NSIA, in commenting on the MoU, said: “We are proud of the impressive strides that Carbon Vista is already making, and we look forward to concluding arrangements with trusted partners like RVCMC, a subsidiary of the Public Investment Fund (“PIF”), Saudi Arabia’s Sovereign Wealth Fund, for the off-take of carbon credits generated through Carbon Vista’s high impact climate initiatives. The MoU aligns with our commitment to partnerships that advance our net zero targets and sustainably enable economic development.”
Michael Curran, Head of Carbon at Vitol also commented, “We are delighted to be partnering with RVCMC. We are committed to investing in projects which promote sustainable development and achieve environmental and social benefits. Addressing climate change will require collaboration and partnership across both the private and public sectors with each leveraging its assets and expertise. It is hugely positive to see Nigeria and Saudi Arabia committing to cooperate in the achievement of their transition goals.”
Riham ElGizy, the CEO of RVCMC also commented, “We need to use every tool at our disposal to tackle the devastating impacts climate change is already having. Our MOU with Carbon Vista is an important commitment between RVCMC and a key African organisation. We look forward to working together to channel climate finance into Nigerian projects.”
The Regional Voluntary Carbon Market Company which was established in October 2022 is 80% owned by the Saudi PIF and 20% owned by the Tadawul Group. At the time of its establishment, the company held a carbon credit auction at an investment forum involving 1 million tonnes of carbon credits.
Also Read: NSIA’s Carbon Vista Signs MOU on Carbon Credit
Carbon Vista on the other hand was created in April 2023 as a partnership between the NSIA and Vitol Group, with each group committing $50 million to the partnership. As per NSIA, the partnership aims to provide rural households with efficient devices that will reduce their reliance on wood fuel, lower greenhouse gas emissions, and save both money and time.
What are Carbon Credits?
Carbon credits are a unit of measurement used to quantify the reduction or removal of greenhouse gas emissions from the atmosphere. They represent a financial incentive for individuals, organizations, or countries to reduce their carbon footprint and contribute to mitigating climate change. They are typically generated through projects or activities that result in the reduction, avoidance, or removal of greenhouse gas emissions. Examples include renewable energy projects, reforestation initiatives, energy efficiency improvements, or methane capture from landfills.
When a project successfully reduces or removes a certain amount of greenhouse gas emissions, it earns carbon credits. These credits can be bought, sold, or traded in carbon markets.
The MoU between Carbon Vista and RVCMC sets up an agreement where Carbon Vista’s carbon credits will be sold at auctions organized by RVCMC. Some of the implications of setups such as this for Nigerians include:
- The development of renewable energy projects, energy efficiency initiatives. For example, the NSIA highlighted that Carbon Vista’s initial investment is in a household energy efficiency program that specifically targets clean cooking and water filtration devices. The project aims to provide up to 200,000 of these devices to rural households.
- The move by NSIA can also trigger the opening up of Nigeria’s carbon market. Nigeria currently has an Energy Transition Plan which targets Net Zero Carbon Emission by 2060. However, progress on this front has been slow. With a thriving carbon market, Nigeria has the opportunity to become a global leader in the renewable energy sector, which can significantly expedite the achievement of the Net Zero Carbon goal.
- Carbon credits can be a money spinner for Nigerian companies through platforms such as the African Carbon Markets Initiative which was formed in November 2022. The Global Voluntary Carbon Market has a market value of $2 billion, however, this value is projected to hit $30 billion by 2030.
With the proposed activation of a Carbon Tax system in Nigeria as outlined by the DG of the National Council on Climate Change in February 2023, many organizations will be incentivized to generate carbon credits in Nigeria.
About NSIA
Nigeria Sovereign Investment Authority (NSIA) is the Sovereign Wealth Fund of the Federation of Nigeria. The investment institution was set up to manage the excess earnings from the FG from petroleum. The company now boasts a diverse portfolio of investments in different sectors, including, infrastructure, healthcare, tech, and agriculture, among others. These investments are made through three distinct and ring-fenced funds, which are: Nigeria Infrastructure Funds, Future Generation Funds, and Stabilization Fund.
Also Read: Nigeria To Introduce A Carbon Tax System To Increase Revenue Generation
The company also has a portfolio of third-party investments such as the Presidential Infrastructure Development Fund (PIDF), an initiative of the Federal Government to fund federal government infrastructure projects in Nigeria. PIDF is responsible for funding the Lagos-Ibadan Expressway, the Second Niger Bridge, and the Abuja-Kaduna-Zaria-Kano Road.
