The federal government, through the Nigeria Sovereign Investment Authority (NSIA) and Vitol, an energy and commodity trader, has signed a $50 million joint venture company known as Carbon Vista to invest in projects that will curb greenhouse gas emissions in different sectors.
The joint venture agreement was designed to invest in a range of carbon avoidance and removal projects like climate-smart agriculture, green industrial technologies, and waste management and attract a final investment decision on the first projects.
The Carbon Vista aims to support Nigeria in meeting her net zero targets through investment in carbon-avoidant and removal projects like water purification, reforestation, and clean cooking that generate carbon credit that can be validated, registered, and subsequently monetised.
In addition, the JV will commence with projects in Nigeria, partnering with local firms with proven track records of successfully delivering high-quality projects, combining carbon offsetting with social outcomes that contribute to attaining UN Sustainable Development Goals.
Investment opportunities
The $50 million initial investment will focus on reducing emissions in Nigeria’s infrastructure, agriculture, and energy sectors, combining carbon offsetting with social outcomes that contribute to attaining United Nations (UN) Sustainable Development Goals.
It will also attract new investors as the partners develop the project pipeline. The investment will be channeled to renewable energy projects, environmental, social, and governance (ESG) initiatives, and other low-carbon initiatives in Nigeria that will attract additional funding from other investors.
“CarbonVista represents yet another milestone in NSIA’s mission to build critical infrastructure and create investment opportunities that drive economic growth and development in Nigeria,” said Zainab Ahmed, minister of finance, budget, and national planning, during the signing of the joint venture deal in Abuja.
Carbon Vista will also present investment opportunities in sustainable infrastructure, energy efficiency, carbon offsetting, and private equity funds focusing on sustainable development.
Carbon market prospects
This development will help deepen Nigeria’s carbon market. In the last two months, the federal government concluded plans to unveil a carbon tax policy and budgetary system for the country, in line with the recently approved Energy Transition Plan, as part of the Climate Change Act. Under the arrangements, the federal government is expected to set a price that emitters pay for each ton of greenhouse gas emissions.
With the presence of the carbon tax policy coupled with the benefits of Carbon Vista, Nigeria can be a catalyst in creating the domestic emissions trading scheme. This will also create more carbon credits, attract foreign investment, encourage carbon offsetting, support sustainable development, and demonstrate leadership on climate change.
“Nigeria’s contribution to global carbon emissions is small, but these projects present an opportunity for Nigeria to profit and gain in the carbon market by implementing green projects. The projects will impact mostly on sustainable development goals 6, 7, 9, and 13,” said Chinedu Onyegbula, an energy sector specialist and director at Bullox Resources Limited.
At the official signing ceremony of the JV, Yemi Osinbajo, the Vice President, said the importance of an enabling environment is crucial for Nigeria to play a global role in voluntary carbon markets. This is why I would like NSIA to take the lead in developing the first Nigerian carbon market activation plan and look forward to engagement on the plan.
“This joint venture should be a catalyst in creating the domestic emissions trading scheme, a pioneer in the Africa Carbon Market Initiative (ACMI), and it will create a pipeline of high-quality credits into the global voluntary carbon markets,” he said.
“When combined with a comprehensive corporate energy transition strategy, offsetting will play a key role in meeting the Paris Climate Agreement objectives and contribute toward the UN Sustainable Development Goals.”
During the signing ceremony, the finance minister said that a thriving carbon market can create new opportunities for businesses and investors while driving the country’s transition towards a low-carbon economy.
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Energy transition prospects
The joint venture is a potential benefit for Nigeria’s renewable energy sector and will broaden its energy transition goal. This will also reduce Nigeria’s carbon footprint, and increase Nigeria’s electricity generation capacity.
“Africa can become the first green civilisation to use renewable fuel for a transformative economy by using its young population and effectively deploying green manufacturing on the scale required to become the global factory of the world,” Osinbajo said.
Supporting the development of sustainable infrastructure and renewable energy projects via the JV can help Nigeria’s energy transition by diversifying its energy mix, increasing energy access, promoting private sector investment, reducing greenhouse gas emissions, and meeting international commitments.
Onyegbula said Nigeria’s energy transition plan calls for significant human, natural, and financial investments to meet the challenges and opportunities. The joint venture investment will contribute towards this expectation.
Direct benefits to Nigerians
Experts say the joint venture will influence job creation, increased energy access, economic development, productivity, and revenue generation. The joint venture is expected to create job opportunities in the renewable energy sector and support Nigeria’s broader economic development goals. This will help ease the country’s unemployment rate. Part of the projects the joint venture provides is climate-smart agriculture that will ease food prices.
“The increased adoption of climate-smart agriculture interventions can reduce the hike in food prices in Nigeria by producing more and better food to improve nutrition security and boost incomes,” Precious Bernadette Esogbue, a research analyst, Clean Technology Hub, told BusinessDay.
CSA is an integrated approach to managing landscapes—cropland, livestock, forests, and fisheries—addressing the interlinked challenges of food security and climate change.
In addition, the JV’s first investment will be in a household energy efficiency programme, including improved efficiency, clean cooking, and water filtration devices. According to the Multidimensional Poverty Index (MPI) report by NBS, over half of the 113 million poor Nigerians cook with dung, wood, or charcoal, rather than clean energy. Also, approximately one billion people in sub-Saharan Africa rely on wood and charcoal for daily cooking and water purification.
This has been identified as a major cause of the nearly four million hectares of annual deforestation and degradation across the continent. Providing rural households with efficient household devices significantly reduces wood fuel consumption, related greenhouse gas emissions, and household air pollution while saving communities money and time. The project’s initial scope is to deploy up to 200,000 efficient household devices.
In addition, the joint venture will improve the health of Nigerians by reducing the use of fossil fuel-powered electricity generation, which is a major contributor to air pollution that can lead to respiratory diseases and other health problems. Developing renewable energy projects can reduce air pollution, improve the health of Nigerians, reduce Nigeria’s dependence on expensive imported fossil fuels and decrease energy costs for households and businesses.
Climate change mitigation
Carbon Vista represents a significant investment in Nigeria’s renewable energy sector, which could help the country reduce its reliance on fossil fuels and mitigate the effects of climate change. This is significant for Nigeria’s efforts towards sustainable development and achieving net-zero emissions by 2060.
This investment can help Nigeria mitigate climate change by supporting the development of sustainable infrastructure like building green buildings, implementing sustainable transport systems, and improving waste management which will reduce greenhouse gas emissions.
“This is the type of collaboration required between the public and private sectors as well as the civil society in the fight against climate change,” Osinbajo said.
Aminu Umar-Sadiq, managing director/CEO of NSIA, said that given the NSIA’s mandate as the custodian of economic resources for the next generation of Nigerians, tackling climate risks that have adverse effects on the environment is core to the implicit objectives of the Authority.
“NSIA’s sustainability objectives go beyond seeking out profitable investments that incorporate climate solutions, but more pressingly to mitigate activities that could have an adverse impact on the well-being of the next generation,” he said.
