Nigeria To Introduce A Carbon Tax System To Increase Revenue Generation

The Federal Government will soon introduce a carbon tax policy and budget system to improve revenue generation in the country. Salisu Dahiru, the Director-General of the National Council on Climate Change (NCCC), informed State House correspondents in Abuja on Monday about this development.

He stated that the carbon tax policy aligns with the Climate Change Act, which includes the recently approved Energy Transition Plan. In compliance with the Climate Change Act 2021, the NCCC has been authorized by the president to lead the Energy Transition Plan.

Also Read: African Countries Must Take a Balanced Approach to the Energy Transition

The Director-General mentioned that the agency has been granted permission to commence vital tasks outlined in the Climate Change Act, such as setting up a carbon budget for the nation. He noted,

“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.”

Explaining the framework of the policy, he added, ”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.”

He revealed that the Council instructed the Secretariat to create the structure for carbon trading and to establish the framework for a climate change fund for Nigeria. He explained that this would serve as the primary revenue source and funding stream for the Council’s operations. He added that the funds will also finance projects to aid Nigeria in fulfilling its commitments under the nationally determined contributions and the 2060 net zero goal.

According to Mr. Salisu, “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

Speaking on Gas Flaring, Dahiru explained that implementing the energy transition plan is part of the Council’s mandate. Further noting that the Energy Transition Plan, which is a pioneering initiative in Africa, focuses on using natural gas as the transitional energy source in Nigeria.

Also Read: Are Nigeria’s promises to end gas flaring merely hot air?

“This 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 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.” He noted.

Also Read: Current Energy Crisis Threatens Sustainability Of Renewable Energy Supply

The Carbon Tax Act took effect on June 1, 2019, in Nigeria. The tax applies to direct emissions in the categories listed in the National Greenhouse Gas Emission Reporting Regulations.

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