Carbon markets remain a marginal contributor to global climate finance, but Nigeria is positioning them as a material revenue stream within its broader energy transition strategy.
At the 2026 Abu Dhabi Sustainability Week, President Bola Tinubu said the country’s newly activated carbon market framework could generate between $2.5 billion and $3 billion annually over the next decade, a claim that underscores both Nigeria’s ambition and the execution risks tied to scaling high integrity credits in emerging markets.
The framework rests on the National Carbon Market Activation Policy and a newly launched National Carbon Registry, tools intended to formalize emissions accounting, verification, and credit issuance. Approved in October 2025, the policy arrives as international scrutiny of voluntary carbon markets intensifies, with buyers increasingly demanding transparent methodologies, robust monitoring, and credible governance. Nigeria’s decision to prioritize a centralized registry reflects lessons from earlier African carbon initiatives that struggled to attract premium pricing due to fragmented oversight and inconsistent standards.
Carbon revenues are meant to complement, not replace, public climate finance. Alongside the policy rollout, the government has operationalized a $2 billion Climate Change Fund and restored funding to the National Council on Climate Change, signaling an attempt to align market based mechanisms with state led coordination. The combination is designed to move Nigeria beyond project level pilots toward a pipeline capable of meeting international demand, particularly from corporate buyers under pressure to demonstrate verifiable emissions reductions.
Nigeria already hosts dozens of voluntary carbon projects, primarily in forestry, clean cooking, and small scale renewable energy. However, market participants have long pointed to bottlenecks in project approval timelines, baseline data quality, and revenue certainty. The new framework aims to address those gaps by standardizing reporting and verification while broadening eligibility to include agricultural practices and larger renewable assets. If implemented effectively, this could increase credit volumes and reduce transaction costs, two factors that have historically constrained African participation in global carbon markets.
The economic logic behind the policy reflects Nigeria’s structural constraints. Despite vast renewable and natural capital potential, the country faces persistent investment gaps in energy access, grid infrastructure, and clean cooking. Carbon finance offers a mechanism to monetize emissions reductions in sectors that are otherwise difficult to fund through conventional project finance. Tinubu’s claim that a broader green industrialization push could unlock $20 billion to $30 billion annually in climate finance suggests the carbon market is intended as a signaling tool to crowd in capital rather than a standalone solution.
Analysts caution that projected revenues depend heavily on credit quality and international demand. Global voluntary carbon market volumes fell in 2023 amid integrity concerns, even as interest in high quality, jurisdictional scale credits increased. Nigeria’s emphasis on governance and transparency aligns with this shift, but credibility will hinge on independent oversight and alignment with emerging international standards. Without that, price discounts could erode the revenue potential implied by headline figures.
There is also a timing challenge. Developing forestry or agricultural carbon projects at scale requires years of data collection and monitoring before credits can be issued. Clean cooking and renewable energy projects can generate credits more quickly, but competition is intensifying as other African countries roll out similar frameworks. Nigeria’s advantage lies in scale, both in emissions reduction potential and in market visibility, but first mover benefits will depend on how quickly the registry becomes fully operational and recognized by major standards bodies.
From a policy perspective, the framework intersects with Nigeria’s broader energy transition objectives. Carbon revenues could support rural electrification, reduce reliance on biomass for cooking, and incentivize sustainable land use, aligning climate mitigation with development outcomes. However, the distribution of benefits remains a sensitive issue. Ensuring that local communities capture a meaningful share of carbon revenues will be critical for political and social acceptance, particularly in forestry and agriculture based projects.
