Nigeria is making a calculated wager on climate markets, one that blends environmental ambition with hard economic logic. At the centre of this strategy is a newly activated carbon market that the government believes can generate as much as $2.5–$3 billion annually over the next decade, while repositioning Africa’s largest economy as a serious player in global climate finance.
This is not a symbolic climate pledge. It is a structural shift in how Nigeria plans to fund development, modernise energy systems, and monetise its vast natural assets at a time when traditional climate aid is proving inadequate.
From oil giant to carbon trader
Speaking to global investors and policymakers at Abu Dhabi Sustainability Week 2026, President Bola Ahmed Tinubu framed Nigeria’s carbon market as a development opportunity rather than a climate constraint. The message was clear: climate action, if properly designed, can unlock capital, spur industrial growth, and create new income streams for communities.
That vision is now underpinned by policy. In October 2025, Nigeria approved its National Carbon Market Framework, followed by the launch of a National Carbon Registry and the operationalisation of a Climate Change Fund. Together, these reforms establish the rules for carbon credit registration, verification, issuance, and trading, areas that have historically undermined trust in carbon markets across the Global South.
The aim is credibility. By strengthening emissions reporting and transparency, Nigeria wants its carbon credits to meet international quality standards and attract buyers in both voluntary and compliance markets.
How the market is expected to work
At its core, a carbon credit represents one metric ton of carbon dioxide avoided, reduced, or removed from the atmosphere. Nigeria plans to generate these credits across a wide range of sectors: forestry, renewable energy, clean cooking, agriculture, waste management, and industry.
The government will initially prioritise participation in voluntary carbon markets and international trading, while laying the groundwork for a domestic emissions trading system and carbon tax in the future. Oversight sits with the National Council on Climate Change (NCCC), chaired by the President, supported by a dedicated carbon market office responsible for approvals, registries, and market supervision.
Nigeria is not starting from zero. It already has 57 registered voluntary carbon projects, mostly in household energy, renewables, and forestry, with about 5.8 million tons of credits issued so far. The new framework is designed to rapidly expand that pipeline, this time with clearer incentives and tighter governance.
Incentives designed to crowd in capital
To attract investors wary of past failures in global carbon markets, Nigeria is deploying fiscal carrots alongside regulation. The framework allows for tax exemptions on carbon credit revenues for up to ten years, accelerated capital allowances for low-carbon assets, and deductions for research and development linked to emissions reduction.
Officials argue that these measures remove long-standing structural risks that have discouraged private capital, while signalling that carbon markets are now a core part of Nigeria’s economic strategy, not a side project.
This approach aligns with broader climate financing initiatives already underway. The government has outlined a $500 million climate-resilient infrastructure platform, a $2 billion national climate investment platform, and a $50 billion sub-regional green bond, which was nearly fully subscribed. Multilateral partners are also active: the World Bank is implementing a $750 million programme to expand clean electricity access to more than 17.5 million Nigerians.
Energy transition meets social development
Nigeria’s carbon strategy is closely tied to its energy reforms. The Electricity Act of 2023, which decentralised power generation and distribution, has opened the door for renewable energy solutions in rural communities, off-grid health centres, schools, and markets.
According to President Tinubu, the country’s energy transition plan deliberately integrates climate mitigation, industrial growth, and social development into a single framework, an attempt to avoid the false choice between development and decarbonisation. The long-term target remains net-zero emissions by 2060, alongside universal access to modern energy.
Taking the case global
At COP30 in Brazil, Vice President Kashim Shettima reinforced this narrative, describing Nigeria as a hub for nature-positive investment in the Global South. He said proceeds from carbon markets and the Climate Change Fund would be reinvested into community-led reforestation, blue carbon projects, sustainable agriculture, and coastal ecosystems.
Shettima also used the platform to push for reforms beyond Nigeria’s borders, calling for grant-based finance, debt-for-nature swaps, and expanded use of Article 6 carbon mechanisms under the Paris Agreement. His argument was both moral and economic: countries that contributed least to climate change should not be left to finance global public goods alone.
Domestically, Nigeria is already scaling nature-based solutions. Initiatives such as the Great Green Wall, which spans 11 frontline states, a Forest Landscape Restoration Plan targeting over two million hectares by 2030, and a Marine and Blue Economy Policy are all being folded into the carbon market ecosystem.
Betting against a fragile global market
Nigeria’s timing is bold and risky. Global carbon markets have shrunk sharply since 2021 amid concerns over project quality and corporate pullback from climate commitments. Yet analysts expect long-term demand to rebound, with global carbon credit supply potentially expanding 20-35 times by 2050 as markets reset around integrity and impact.
Several African countries have moved to tighten control over carbon markets in pursuit of greater national benefit. Nigeria’s approach is more expansive: instead of renegotiating old deals, it is building an institutional architecture designed to scale quickly while meeting international scrutiny.
Whether the bet pays off will depend on execution, especially enforcement, transparency, and community inclusion but the direction is unmistakable. Nigeria is no longer treating climate policy as an external obligation. It is reframing it as a tool of economic statecraft, one that could unlock billions in investment, create green jobs, and anchor the country’s role in the next phase of global climate finance.
If successful, Nigeria’s carbon market could offer a compelling counter-narrative: that climate action, when rooted in local development priorities, can be a source of growth rather than sacrifice.
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