Nigeria Bets on Carbon Trading as Tinubu Clears Framework Aimed at $3bn a Year by 2030

President Bola Tinubu has approved Nigeria’s carbon market framework, marking a decisive turn in how Africa’s 4th-largest economy plans to finance its climate ambitions and reposition itself in global capital flows.

Framed as both an environmental policy and an economic strategy, the move signals Abuja’s intent to turn emissions reductions into a tradable asset class capable of generating at least $3 billion annually by the end of the decade.

The disclosure by Tenioye Majekodunmi, Director-General of the National Council on Climate Change (NCCC), puts an official stamp on months of policy groundwork. With implementation now authorized, Nigeria is moving from ambition to execution, seeking to build a regulated market where carbon credits can be issued, tracked, traded, and monetized across key sectors of the economy.

At its core, the framework positions carbon markets as an instrument of statecraft. Rather than treating emissions reductions as a compliance burden, the government is presenting them as an exportable commodity. Energy, agriculture, forestry, waste management, and heavy industry are all identified as sources of large-scale emissions-reduction projects that can be converted into credits and sold to global buyers.

Majekodunmi said Nigeria will initially focus on voluntary carbon markets and international trading mechanisms, where companies and governments purchase credits to offset emissions. Over time, the plan is to layer in a domestic emissions trading system and, eventually, a carbon tax. That sequencing reflects a cautious approach, designed to attract foreign capital first while domestic institutions and data systems mature.

“Operationalizing the framework is an indication that carbon markets are a key part of the country’s economic strategy,” Majekodunmi said, describing it as a pathway for attracting investment, supporting the energy transition, and anchoring Africa more firmly in global climate finance.

The incentives embedded in the policy underscore that investment focus. A national carbon registry will be launched to track credits and prevent double-counting. Companies will be required to report emissions, creating a data backbone that Nigeria has historically lacked. Compliance obligations will be phased in line with the country’s climate commitments, which include cutting emissions by 2035 and reaching net zero by 2060.

To sweeten the deal for investors, the government is offering generous fiscal concessions. Carbon credit revenues will enjoy tax exemptions for up to ten years. Firms investing in low-carbon assets will benefit from accelerated capital allowances, while research and development tied to emissions-reduction projects will qualify for deductions.

Officials argue these measures are designed to remove the structural risks that have previously discouraged large-scale participation in carbon markets.

Nigeria is not starting from zero. According to government data, the country already hosts 57 registered voluntary carbon projects, largely in household energy, renewable power, and forestry. These projects have issued about 5.8 million tons of carbon credits so far. The new framework aims to expand that pipeline rapidly, but with stricter oversight and alignment to international quality standards, a response to growing skepticism in global markets about the credibility of offsets.

Oversight will sit with the NCCC, chaired by the President himself, giving the market unusual political weight. A dedicated carbon-market office will handle project approvals, registries, authorizations, and supervision. That centralized structure is intended to reassure international buyers who have grown wary of fragmented governance and weak enforcement in some emerging markets.

Globally, carbon markets are in flux. Carbon credits, each representing one metric ton of carbon dioxide avoided or removed, were once hailed as a cornerstone of corporate climate strategies. But confidence has eroded. The voluntary carbon market has shrunk by roughly two-thirds since 2021, battered by concerns over inflated claims, poor project quality, and a pullback in corporate climate commitments.

Yet long-term forecasts suggest demand could rebound. BloombergNEF estimates global carbon credit supply could expand 20- to 35-fold by 2050 as governments and companies search for credible ways to meet net-zero targets. Nigeria is betting that tighter regulation and sovereign backing can position its credits as “compliance-grade,” attractive not just to companies seeking reputational cover but to states and regulated entities facing binding emissions limits.

Other African countries are moving in the same direction. Zimbabwe, Kenya, and Malawi have all taken steps to regulate their carbon offset industries, though with mixed results. Nigeria’s advantage lies in scale, political backing, and its attempt to integrate carbon markets into a broader economic and fiscal framework rather than treating them as a niche environmental policy.

The approval also builds on commitments made on the global stage. In November 2025, Nigeria unveiled its ambition to mobilize up to $3 billion annually through its National Carbon Market Framework and Climate Change Fund at the UN climate talks in Belem, Brazil. Vice President Kashim Shettima, speaking at a COP30 session on climate and nature, said Nigeria’s strategy was about restoring balance between development, environmental stewardship, and economic resilience.

That rhetoric now has policy teeth. If successfully implemented, the framework could reshape how Nigeria finances climate action, channels foreign investment, and asserts leadership across the Global South.

However, the risks remain substantial, from market volatility to credibility challenges. But with presidential backing and a clear revenue target, Nigeria has placed a bold wager: that carbon, long treated as a liability, can become a cornerstone of its next economic chapter.