Climate ministry warns of long-term financing gap as carbon market outpaces Nigeria’s regulatory framework, leaving communities at risk

The federal government has raised concerns over Nigeria’s rapidly expanding carbon credit market, with over 350 projects generating millions of dollars nationwide, often without clear sovereign authorisation or formal agreements to benefit local communities. This was highlighted during events marking World Environment Day across the country in June.

According to the Ministry of Environment, many carbon offset projects currently operating in states such as Lagos, Cross River and Nasarawa have been selling credits on the international market without routing transactions through a national registry or obtaining required approvals. Officials say this exposes the country to a significant climate finance gap, as well as potential loss of revenue meant for national development and affected host communities.

The warning follows recent developments in other African countries like Zimbabwe, where despite following international rules under Article 6 of the Paris Agreement—issuing authorisations, registering credits and preventing double-counting—locally generated credits were still deemed ineligible for global aviation schemes such as CORSIA. This has increased calls for Nigeria to strengthen its own regulatory framework before fully integrating into global carbon trading mechanisms.

An official from the Federal Ministry of Environment said in a press briefing in Abuja that, “Nigeria must assert its sovereign rights over all carbon assets generated within our territory to avoid losing both economic and environmental benefits.” The official noted that while foreign investors have brought capital into sectors like forestry and renewable energy, most deals lack transparent community benefit agreements or public disclosure on approval processes. Experts warn this could undermine trust and lead to disputes if not urgently addressed.

Stakeholders are urging swift action by government to finalise national guidelines for carbon markets and establish a centralised registry for all emissions trading. The Ministry has promised a stakeholder summit later this year to consult widely before new rules are implemented. Until then, industry players and communities remain in limbo, with billions of naira worth of potential climate finance hanging in the balance.

Source: https://guardian.ng/business-services/climate-financing-is-nigerias-carbon-market-running-ahead-of-its-rules/