Carbon Markets: Nigeria’s pathway to net zero

Carbon isn’t just a liability; it’s also an asset. Here’s how Nigeria can monetise its carbon potential responsibly.

For decades, carbon has been treated as a problem, a pollutant to be tamed. But a transformative idea is now shaping climate and economic policy globally: carbon is not only something to reduce; it can also be an asset to generate economic value. When measured, governed and traded with integrity, carbon becomes a development tool. For Nigeria, carbon markets are not just about climate action; they are a strategic pathway to net zero and sustainable growth.

Carbon markets allow countries, companies and communities to generate revenue by reducing emissions or increasing carbon sequestration through reforestation, clean energy, sustainable agriculture and waste management activities. These efforts generate carbon credits, which are tradable certificates representing emissions reductions. These certificates can be sold in voluntary or compliance markets. Simply put: protecting and restoring nature, investing in clean solutions, and reducing emissions can generate tradable value.

African countries are already demonstrating this potential. Kenya’s forest conservation projects have generated sustainable revenues and supported local livelihoods. Rwanda’s structured approach to carbon credits is integrated into its green growth strategy. In Ghana, clean cookstove projects reduce deforestation, improve health and generate valuable credits; all these prove that carbon finance can yield social and environmental dividends.

Nigeria’s potential is even greater.

From mangrove restoration in the Niger Delta to reforestation in the Middle Belt and renewable energy opportunities in our cities, the country possesses abundant natural and economic carbon assets. Our forests, wetlands and soils are powerful carbon sinks; our young innovators and entrepreneurs are developing climate solutions. The question is no longer whether Nigeria can participate in carbon markets but whether we will do so strategically, credibly and inclusively.

If carbon markets are poorly designed, they risk becoming speculative arenas where financial value flows offshore, with minimal benefit to local communities. If done well, they can finance rural livelihoods, green jobs, biodiversity protection and climate resilience.

Governance and new national frameworks are now anchoring Nigeria’s carbon strategy. In April 2025, the Federal Government finalised the Carbon Market Activation Policy, targeting up to $2.5 billion in climate investment by 2030 by unlocking carbon finance through high-integrity carbon credits. More recently, President Bola Ahmed Tinubu approved a National Carbon Market Framework that will enable Nigeria to generate between $2.5 billion and $3 billion annually by 2030 through carbon trading, positioning the country as a key climate finance hub in Africa.

This framework introduces credible systems for registering and trading carbon credits, establishes a national carbon registry, mandates emissions reporting, and sets out phased compliance measures that align with Nigeria’s net-zero commitment by 2060 and medium-term emissions reductions by 2035. These are foundational steps toward a compliance carbon market where emissions allowances and credits are regulated rather than purely voluntary, thus opening deeper engagement with both domestic and international buyers.

To coordinate this transition, oversight will rest with the National Council on Climate Change (NCCC), chaired by the President and now restored to the federal budget. The Council’s Director-General, Tenioye Majekodunmi, has emphasised that the policy will foster transparency, investor confidence, and international standards for high-quality credits.

Complementing this, the Carbon Market Association of Nigeria (CMAN) was launched at COP30 to bring together stakeholders across the value chain, support implementation of the national framework, and ensure Nigerian credits command credibility on global exchanges.

But building a robust carbon economy requires more than policies and associations. It requires three strategic pillars.

First: Governance before monetisation.

Strong institutional frameworks must define carbon rights, project approvals, measurement, reporting and verification (MRV) systems, and community benefit-sharing mechanisms. Without clear governance, markets become speculative and unsustainable. Nigeria must embed carbon markets within its climate commitments (NDCs) and national development strategies.

Second: Community value creation.

Carbon projects must reinforce local development. Revenues should support jobs, infrastructure, skills transfer and livelihood security. For instance, mangrove restoration in the Niger Delta should not just deliver credits; it should also bolster fisheries, flood protection and incomes for coastal communities. Carbon finance should be a tool for equitable development, not extraction.

Third: Private sector mobilisation.

Carbon markets cannot be government-driven alone. Banks, agribusinesses, energy firms, manufacturers and tech innovators must integrate carbon strategies into investment and risk frameworks. Carbon should sit within corporate finance decisions, ESG targets and long-term business planning.

Globally, corporations increasingly treat carbon portfolios as balance-sheet assets. Africa must avoid supplying cheap credits alone; it is time we must build market credibility, pricing power and institutional depth.

Nigeria’s pathway to net zero will not be funded by public budgets alone. Climate finance, private capital and carbon revenues must work in concert. Carbon markets provide the bridge between sustainability and profitability as well as climate action and economic growth.

But monetisation must never replace environmental and social integrity. Nigeria’s future belongs to nations that can integrate climate ambition with economic intelligence, turning sustainability into strategy.

Carbon is no longer only what we emit. It is what we manage, value and invest. For Nigeria, carbon markets are more than a route to emissions reduction; they are a new frontier for sustainable prosperity.

Sarah Esangbedo Ajose-Adeogun is the founder and managing partner at Teasoo Consulting Limited, a foremost ESG consulting firm. She is a former Community Content Manager at Shell Petroleum Development Company and served as the Special Adviser on Strategy, Policy, Projects, and Performance Management to the Government of Edo State. She is also the host of the #SarahSpeaks podcast on YouTube @WinningBigWithSarah, where she shares insights on leadership, strategy, and sustainable growth.