The National Carbon Market Activation Policy (NCMAP), supported by the Climate Change Act 2021, establishes a comprehensive ecosystem to catalyze high-integrity carbon investments.
Institutional Framework and Governance
National Council on Climate Change (NCCC): The apex regulatory body chaired by the President. It oversees policy implementation, approves regulations, and ensures alignment with Nigeria’s Nationally Determined Contributions (NDCs).
Secretariat / Carbon Market Office (CMO): Acts as the administrative and technical arm. It serves as the Designated National Authority (DNA), manages the National Carbon Registry, and authorizes the transfer of Internationally Transferred Mitigation Outcomes (ITMOs).
Nigeria Revenue Service (NRS): Responsible for developing and implementing the carbon tax mechanism and managing fiscal incentives.
Intergovernmental Committee on Carbon Market Activation (IGCCMA): Coordinates the whole-of-government approach and leads negotiations for carbon project development.
Market Mechanisms:
The regulation adopts a hybrid approach to carbon trading:
Voluntary Carbon Market (VCM): Nigeria aims to scale high-quality credits by requiring a No-Objection letter for all VCM projects. Projects seeking Corresponding Adjustments must meet rigorous Article 6 criteria to prevent double counting.
Article 6 Framework: The government manages bilateral transfers (Article 6.2) and a centralized crediting mechanism (Article 6.4).
Compliance Markets: A medium-to-long-term plan includes a mandatory Carbon Tax and Emissions Trading System (ETS) for high-emitting sectors.
Project Eligibility and Exclusions:
The policy specifies that project eligibility is strictly tethered to Nigeria’s climate ambitions, particularly the NDC priority sectors (conditional target).
Regarding exclusions and mitigating the overselling risk, the framework provides the government with the authority to manage the negative list to guide market players and prevent the registration of undesirable project types.
Authorization:
The policy states that Article 6.2 and 6.4 activities will be authorised by Nigeria, subject to meeting the regulatory requirements and eligibility criteria established by the country.
Project Development Cycle:
To be included in Manual of Procedures
Registry:
- The National Carbon Registry will be established as a centralized repository to track all existing and future carbon market activities in Nigeria, covering both voluntary and compliance-based mechanisms and to record the issuance, holding, transfer, and retirement of carbon credits or mitigation outcomes.
- It will be managed by the Secretariat of the NCCC.
- The registry will be designed to align with international protocols and will provide real-time information on credit availability and transactions.
Share of Proceeds:
For activities under Article 6.4 of the Paris Agreement, the SOP is mandatory and follows international requirements for adaptation and administrative costs. For Article 6.2 and Voluntary Carbon Market (VCM) activities, Nigeria will establish its own guidelines, with the SOP potentially being collected in kind (a percentage of the credits generated) or as a financial levy on credit sales.
Grievance mechanism:
Nigeria will implement rules and procedures allowing carbon market participants and affected communities to appeal government decisions on credit issuance, authorization, or adjustments.
Benefit sharing:
The Carbon Market Regulations will establish fair benefit-sharing by specifying benefit types, carbon rights, and allocation methods like direct payments or managed funds. It is designed to incentivize stakeholders, particularly forest management communities, to support emission reduction and removal projects.
Fees, penalties and levies:
The Carbon Market Regulations will establish fair levies for the share of proceeds and administrative fees commensurate with government costs. A public, periodically revised fee schedule will ensure transparency and predictability for market participants. Additionally, the framework will define specific activities that attract penalties to ensure compliance.
Fiscal Incentives:
Nigeria is implementing a green fiscal policy to provide clear economic signals that encourage private sector participation in emission reduction projects. Under the Climate Change Act 2021, the government intends to offer a variety of tax-based incentives, including potential VAT and income tax exemptions on carbon credits and associated revenues for a period of up to ten years. Additionally, the framework considers accelerated capital allowances (ACA) for assets used in carbon reduction, such as renewable energy installations, and allows companies to deduct research and development (RD) expenses related to low-carbon technologies from their taxable income. These incentives are designed to ensure the financial viability of climate projects while aligning with Nigeria's broader mitigation goals.
Validation and Verification Body:
According to the Nigeria Carbon Market Activation Policy, a Validation and Verification Body (VVB) must be (i) accredited by an acceptable carbon standard and (ii) approved by the National Council on Climate Change (NCCC) to operate within the framework.
Recognition of methodologies by regulation:
The framework requires participants in Nigeria's Voluntary Carbon Market (VCM) to adhere to recognized international standards, specifically naming Gold Standard (GS), Verified Carbon Standard (VCS), the Climate, Community Biodiversity (CCB), and its associated methodologies.
Registration of the PD or project with the national registry for VCM and Article 6:
Both project developers and projects must be registered with the national registry for both the Voluntary Carbon Market (VCM) and Article 6 activities.
Approval for listing, issuance, trade, authorisation and corresponding adjustment:
Nigeria's framework requires specific government approvals and oversight at every stage of the carbon credit lifecycle to ensure environmental integrity and alignment with national climate goals.
