At the heart of the mission to combat climate change lies the concept of carbon markets, a dynamic tool that enables countries and businesses to reduce their carbon footprint while driving economic growth.
Nigeria, despite its relatively modest emissions, has a rapidly expanding economy, bold development ambitions, and a booming population which are set to significantly increase energy demand in the coming decades.
One company that is positioned to make significant strides in Nigeria’s transition to a low-carbon economy is Carbon Limits Nigeria (CLN).
The company which set up shop in 2010 as a Joint Venture of Nigerian partners and Carbon Limits AS (CL) of Norway, was founded to address the growing global focus on sustainability and climate change, offers a unique blend of advisory services and financial support to drive emissions reduction across Nigeria and Sub-Saharan Africa.
“Our goal is to be more than just consultants,” said Heine Melkevik, CEO and managing director; of Carbon Limits Nigeria. “We want to be on the ground, implementing solutions and driving real-world impact”.
He added, “The climate finance market is experiencing a boom, with many new investment opportunities emerging. However, navigating these complexities requires expertise.”
A carbon market is a system where carbon units representing emission reductions are exchanged within a defined framework.
The market is established by governments for policy compliance and by businesses for voluntary greenhouse gas (GHG) emission reductions. Essentially, a carbon market is a platform for trading carbon credits.
The Nigerian carbon market is still in its early stages; however, the 2021 Climate Change Act lays a foundation for transitioning to a low-carbon and climate-resilient economy. Current initiatives, such as renewable energy projects, large-scale tree-planting efforts and methane abatement, highlight the market’s potential.
For Melkevik, Nigeria’s booming economy, with major industries, financial institutions, and consistent growth, presents a wealth of potential clients.
“We have a vast portfolio of opportunities to address, and facing limited competition for our services puts us in a strong position,” Melkevik said.
BusinessDay’s findings showed the company has established itself as a leader in the Nigerian carbon market. The company has been instrumental in securing carbon credits for numerous projects, contributing to over 70 percent of all such projects in the country.
Read also: Meet Carbon Limit Nigeria, the firm behind 70% of Nigeria’s carbon credit project
“We’ve worked with major players like NNPC, Shell, and TotalEnergies, as well as smaller companies and government agencies,” said James Ogunleye, chief technical officer at Carbon Limit Nigeria. “Our work on projects like the sawdust-to-fuel initiative with Lagos State showcases our commitment to innovative solutions.”
Further findings showed CLN’s partnership with ICA-Finance AS, a climate investment company, strengthens its ability to deliver impactful projects and access global markets for carbon credits.
“This ongoing partnership allows for continuous knowledge transfer and the development of a domestic market. The credits generated from these projects are then sold to international markets, creating a win-win situation for both parties,” Ogunleye said.
Lesson from Ghana
Ogunleye said while Nigeria is developing a carbon market framework, it hasn’t been fully defined yet. There’s potential, but the country needs to take action.
“Ghana is a good example – they’re using Article 6 of the Paris Agreement to build partnerships for carbon offset projects. Nigeria should do the same to turn its opportunities into reality,” Ogunleye said.
Ghana has witnessed remarkable growth in its carbon market in recent years, marked by notable achievements. In January 2023, Ghana’s framework on the international carbon market and non-market approaches was published following the approval to pave the way for implementing voluntary cooperation under Article 6 of the Paris Agreement.
The framework outlines operational guidelines for various aspects of Article 6 of the Paris Agreement, covering cooperative approaches, the sustainable development Mechanism, and voluntary carbon markets.
It includes provisions for institutional arrangements, eligibility criteria, methodology and standards, authorization procedures, project development steps, digital infrastructure, fees, and reporting.
Read also: From leaks to credits: How Carbon Limits turns gas to green gold
The establishment of a Carbon Market Office (CMO) under the Climate Change Unit of the Environmental Protection Agency (EPA) has played a pivotal role in facilitating voluntary initiatives under Article 6 of the Paris Agreement in Ghana.
In 2023, the CMO received 35 project requests under Article 6, out of which nine were successfully integrated into the Ghana Carbon Registry (GCR) and allocated mitigation activity participation identification numbers (MID).
On 27 May 2024, Singapore and Ghana signed a carbon credit implementation agreement on carbon credits under Article 6 of the Paris Agreement. This agreement aims to enhance climate ambitions, direct financing towards mitigation efforts, and support sustainable development.
Optimism about Nigeria
Despite challenges such as bureaucratic hurdles and a complex operating environment, CLN remains optimistic about Nigeria’s potential. The company is actively involved in several large-scale projects and sees a bright future for the country’s carbon market.
“The growing awareness of climate change and the government’s push for sustainability creates a favorable environment for our business,” said Melkevik. “We are confident that Nigeria can become a leader in the global fight against climate change.”
