CARBON CREDITS AND THE CARBON MARKET
Carbon credits are basically permits that organizations can trade to produce a certain amount of carbon. How can permits to pollute possibly help the environment?…Well here’s the catch: the amount of carbon emissions permitted with each carbon credit is reduced on a regular basis.If a company is unable to maintain their carbon dioxide (and other greenhouse gas) emissions within the limits of their carbon credits,they will have to pay for more carbon credits to accommodate their excesses. At the same time industries can make money out of their carbon credits by trading them, if they are able to successfully reduce their carbon emissions to an amount much less than the original permit limits, they may trade their carbon credits for money to another organization which may desire to produce more.
There are several benefits to this. First and foremost…the profit! When the Infrastructure Development Company Limited in Bangladesh started the trade of carbon credits in 2006, by the 8th of April, 2023 it had sold 2.53 million carbon credits worth about 16.25 million dollars! Just imagine the revenue the carbon market could generate for our country! It’s a booming business without a doubt. Secondly, the carbon market promotes the utilization of cleaner energy resources and industrial practices. The rate at which organizations switch to the use of renewable energy sources, proper waste disposal methods and even more efficient means of transport can only increase.
So why can’t Nigeria adopt this cap and trade system as well?
Well, there are the basic challenges.We need to evaluate the possible barriers and challenges that need to be eradicated or at least accounted for in the system of trade and industrial management that are commonly used in Nigeria to enable the carbon market system to thrive. We could also collaborate with other organizations such as the African Carbon Markets Initiative to gain support and assistance when implementing this system. The regulations, rules and guidelines to be established to govern the carbon market in our nation is yet another bull to be taken by the horns.
There is, however, still hope for Nigeria to accept this practice and other carbon off-setting projects, in the near future. There is clearly a lot of potential to be harnessed from the environmental sector of our country as according to an article by Esohe Braimah on LinkedIn, Nigeria has the potential to generate 30 million tons worth of carbon credits annually by 2030 and to generate more than $500 million per year. With the advent of the Waste Heat Recovery Project by Dangote Industries Limited Cement, what should stop us as a nation from taking on such carbon offsetting projects and taking advantage of our carbon market so we can generate some revenue from reducing pollution instead of causing it with our endless oil rigging.
It is through articles like this that I hope that young (or older) entrepreneurs and generally the right personnel in each enterprise are sufficiently educated on carbon offsetting practices. I hope they will think about efficient, sustainable ways to increase the revenue of their businesses and of Nigeria as a whole, one of which just maybe advocating for Nigeria’s investment in the carbon market.
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