Harnessing Carbon Credits: A Sustainable Path For Nigeria's Gas Sector

SimmonsCooper Partners


SimmonsCooper Partners (“SCP”) is a full service law firm in Nigeria with offices in Lagos and Abuja. SCP is one of Nigeria’s leading practices for transactions relating to all aspects of competition law, commercial litigation, regulatory compliance, project finance and energy. Our team has gained extensive experience in advising both local and international clients.
As global awareness of climate change and its effects intensifies, nations are striving to balance economic growth with environmental responsibility, pondering the legacy we will leave for future generations.
Nigeria Environment
To print this article, all you need is to be registered or login on Mondaq.com.

As global awareness of climate change and its effects intensifies, nations are striving to balance economic growth with environmental responsibility, pondering the legacy we will leave for future generations. Nigeria is a major contributor to the release of greenhouse gases (GHG) especially through gas flaring, and it is in a critical position where we need to consider the existential challenges. We need to address our "Net Zero 2060" target before the international community while meeting the energy and revenue needs of our approximately 200 million population. This challenge, however, presents a unique opportunity. By leveraging the potential of carbon credits, Nigeria can revitalize its gas sector and move towards a sustainable future. Carbon credits offer a viable solution to reduce greenhouse gas emissions, promote cleaner energy practices, and create economic incentives for sustainable development.

Carbon Credits: A Market Mechanism for Greener Gas

Carbon credits are a practical climate action initiative and a marketable commodity that rewards efforts to recover or prevent a fixed amount of greenhouse gas (GHG) emissions. Essentially, they permit the emission of a specific amount of carbon dioxide (CO2) or other GHGs, typically one metric tonne. Companies with high emissions can acquire these credits by investing in projects that demonstrably reduce emissions, allowing them to offset their environmental footprint while supporting sustainable practices.

For companies transitioning away from greenhouse gas emissions and wasteful flaring practices, carbon credits offer economic incentives. These credits grant convertible points for capturing flared gas or utilizing it productively, such as for energy generation or gas-to-liquid conversion projects. This approach enables companies and countries to significantly reduce their carbon footprint. In Nigeria's gas industry, carbon credits provide a compelling proposition. A significant portion of the sector's emissions comes from gas flaring, which not only pollutes the environment but also wastes valuable resources. By embracing carbon credits, Nigeria can align with its climate goals while creating a new revenue stream through the generation of marketable carbon credits. These credits can be traded on recognized carbon markets, allowing companies to recoup the costs of capturing and utilizing flared gas. Additionally, the sale of these credits can attract investments into clean gas technologies, further accelerating the transition away from flaring and fostering innovation.

High-integrity global carbon markets are projected to generate significant income, with estimates reaching up to $938.75 billion in 2022 and potentially growing to $2,549.42 billion by 2030 under favorable market conditions. Much of this income is expected to benefit communities and countries. It is important to recognise the substantial contribution that agriculture is making to the reduction of carbon emissions. While the gas sector can implement methane collection practices, many carbon credit projects in agriculture focus on reforestation, cover crops, and improved soil management. These sustainable agricultural techniques are profitable in the carbon market, enhancing soil fertility and water retention while sequestering carbon in the soil and vegetation. Over time, these methods boost agricultural productivity and add value to the sector.

Building a Framework

Establishing a robust framework is crucial for Nigeria to participate effectively in the global carbon market. This framework will define clear guidelines and protocols for credible carbon capture and Measurement, Verification, and Monitoring (MVM) processes. It will also open opportunities for private individuals and companies to participate in the system. Additionally, it will establish robust accreditation procedures to ensure the legitimacy of carbon credits generated from gas capture projects, fostering confidence in the market and attracting investment.

Nigeria's involvement in the African Carbon Markets Initiative (ACMI), bolstered by its pledge at COP 27 in Egypt, marks a significant starting point. The creation of the National Council on Climate Change (NCCC) aligns with recommendations from the World Bank and ACMI, paving the way for a structured approach to carbon trading in the gas sector.

By developing a framework, Nigeria can streamline participation in carbon trading, promote sustainable practices, and drive growth in the gas sector, contributing to a greener and more sustainable future.

Challenges and Considerations:

Despite the potential benefits, several challenges impede the widespread adoption of carbon credits in Nigeria's gas sector. One major obstacle is the lack of a clear and comprehensive policy framework for carbon trading. Without well-defined regulations and incentives, potential investors remain hesitant to engage in carbon capture projects due to perceived financial risks.

Another concern is ensuring that the resources allocated for community benefits actually reach the intended beneficiaries. Challenges with financial activities can sometimes raise doubts about the effective distribution of resources. Revamping financial accountability and transparency is crucial to building trust and encouraging investment.

While Nigeria has made commitments to drive the implementation of its 2060 Net Zero plan, the achievability of these plans, especially in the long run, remains a matter of concern. The Nigerian government's plans are often volatile and subject to change or failure in implementation, which can deter investors and stakeholders.

Another significant challenge is the limited technical expertise and infrastructure necessary for monitoring carbon capture projects. Accurately measuring the amount of gas captured and its subsequent impact on emission reduction requires specialized equipment and trained personnel.

Addressing this challenge requires significant investments in technology transfer and capacity[1]building initiatives. Achieving results and benefiting from the carbon market will require a collaborative effort. The government has a crucial role in establishing clear and stable policies that incentivize investments in carbon capture technologies. Additionally, partnerships between the government, NGOs, and private sector actors are essential for developing robust infrastructure and training programs for carbon capture and monitoring.

By addressing these challenges through a coordinated and strategic approach, Nigeria can unlock the potential of carbon credits in the gas sector, fostering sustainable development and environmental stewardship.


The transition to a carbon-neutral economy offers Nigeria the opportunity to create a more robust and sustainable energy sector. By embracing carbon credits and prioritizing methane capture, the gas sector can unlock a significant source of revenue while reducing its environmental footprint. This approach not only helps Nigeria achieve its climate goals but also fosters international partnerships and attracts investments in clean technologies.

Incorporating carbon credits into agricultural practices further empowers smallholder farmers, providing additional income streams and incentivizing sustainable farming methods. This approach enhances agricultural resilience and food security, contributing to a more sustainable and prosperous future for Nigeria.

By addressing the challenges and leveraging the opportunities presented by carbon credits, Nigeria can lead the way in sustainable development and environmental stewardship. The time is now to harness this potential and drive the nation towards a greener, more sustainable future. For more information regarding carbon credits, please contact us at info@scp-law.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More