Nigeria is developing a plan to create a $2.5 billion carbon market. The purpose of this market is to encourage investments, reduce emissions, and promote sustainable growth in Nigeria.
In this exclusive interview with DIPO OLADEHINDE, Carbon Limits Team: Heine Melkevik, CEO and managing director; James Ogunleye, chief technical officer; Jordan McCrackin, chief commercial officer explains Carbon markets offer a unique opportunity for countries to reduce greenhouse gas emissions while promoting sustainable development.
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What’s the idea behind the Carbon-Limits Nigeria and what purpose do you seek to achieve?
Melkevik:
The world’s growing focus on sustainability and climate change creates a need for businesses to adapt. Carbon-Limits Nigeria was founded in Nigeria to address this by offering advisory services for companies transitioning to sustainable practices. We also help companies and organisation secure climate financing, which are funds specifically designated to support emission reduction projects around the world. Our goal is to provide a two-pronged approach: consulting and financial resources, driving real-world impact in reducing emissions across Nigeria and Sub-Saharan Africa.
How has the experience been so far?
Melkevik:
The climate finance market is experiencing a boom, with many new investment opportunities emerging. However, navigating these complexities requires expertise. On the financing side, there’s a need to sift through a vast array of options. Similarly, the advisory side is seeing a surge in demand for expertise related to emissions and climate action.
What have been the biggest things you achieved in the last 15 years?
Ogunleye:
For 15 years, Carbon Limits has become the go-to name for carbon expertise in Nigeria. We’ve tackled various projects, offering both advisory services and climate finance support. On the finance side, we’ve played a key role in securing carbon credits for numerous projects, contributing to over 70 percent of all such projects in Nigeria.
Melkevik:
As a group, we have probably done around 10 million tons of carbon emission reductions. That’s quite significant.
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Ogunleye:
When you look at the advisory as well, the likes of NNPC, virtually most of the major oil and gas companies including Shell, TotalEnergies among others have offered to work with us. We have supported some sort of small companies, got funds and partnered with Lagos State on a project to address waste management. For instance, they studied the sawdust volume at an abandoned sawmill near the Third Mainland Bridge to explore its potential as an alternative fuel, thanks to a collaboration with Lafarge which sparked interest in sawdust as a fuel source. This exemplifies how Carbon-Limits Nigeria connect businesses and promotes innovative waste management solutions.
How were you able to facilitate the agreement between Lafarge and Lagos state?
Melkevik:
Carbon-Limits Nigeria’s core business is consultancy and implementation, where clients only pay if they use our services. However, for projects with significant positive impact, we’re willing to participate even without guaranteed profit. This is because we see ourselves as “practitioners on the ground,” not just advisors. We understand the technical aspects and can implement projects using both global standards and a localised approach. This is evident in our work on carbon and climate financing, where we collaborate with industry players to find practical solutions.
How have you been able to keep pace with the constant change in the climate world?
Melkevik:
Many people have already achieved what we’re striving for today. The leader behind Carbon Limits Nigeria has dedicated his career to climate issues. A Norwegian by nationality, he has spent a lifetime working in this field and is currently 75 years old. This extensive experience positions him as a veteran in the fight against climate change. Our role is to address current needs while anticipating future demands. We must strike a balance, ensuring we meet companies’ present requirements without getting too far ahead of ourselves.
McCrackin: We also work with people all over the world. Trends come up sometimes quite quickly and based on media and the use of technology, some of these things come up within months from one part of the world to the next. We make sure we’re in contact communications with other players in the sector by sharing information and discussing understanding of best practices. For instance, one of the trends that we see that is picked up is around not just reducing the emissions but looking at ways to offset those emissions. One of those for example would be nature-based solutions; looking at things in nature that can actually take carbon dioxide or take that carbon and put it back and store it for at least 300 years. So, I think that’s one example of something that’s come up in terms of trends that we’ve reached out and made sure that we’re at the forefront of that. So, we can bring that as a solution to our clients here in Nigeria.
CLN has explored carbon market opportunities. What is your take on the current state of the carbon market in Nigeria and Sub-Saharan Africa?
Melkevik:
Nigeria’s oil and gas industry has high methane leaks and flaring. Our company helps reduce these emissions, benefiting both state-owned and independent oil companies. The good thing is that you have a competent national company and you have also a number and plethora of independent indigenous-owned oil companies who are operating in the environment. We’re impressed by how receptive Nigerian oil companies are to discussing emission reduction solutions. This openness allows for quick collaboration and access to international climate funding, creating a unique opportunity to fight climate change in Nigeria and other African oil producers. 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.
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The government is going to be doing a lot in terms of investing in the proliferation of CNG buses, pushing a decade of gas dominance. What do you think about all of this? Does this key into some of the things you’re already doing?
Melkevik: The company’s core business of reducing gas leaks aligns with Nigeria’s push for cleaner energy. Captured gas can be used for CNG, LNG etc., replacing dirtier fuels and creating carbon credit opportunities. This focus on sustainability and emissions reduction is exactly what governments and conferences are addressing. When gas gets commercialised, either through CNG, piped gas, LNG, LPG, or condensate, it directly goes from what we do on a day-to-day basis with the operators, into reducing the leaks and the waste going into a large supply of this in Nigeria, which then ties directly into the opportunity to roll out CNG, LPG etc. Every time we prioritise a CNG truck over a diesel truck, there is a carbon credit opportunity there.
CLN boasts a partnership with ICA-Finance AS, a climate investment company. How does this partnership benefit CLN’s clients?
Ogunleye:
International collaboration drives climate action in developing countries. Initially, foreign experts like those from Norway provided knowledge and funding for the first carbon credit project in Nigeria. This project then served as a model for future endeavours and led to the establishment of a local office. Through working alongside international employees, Nigerians gained expertise in carbon credit trading. 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.
Melkevik:
Our team combines expertise in oil & gas with climate and sustainability. These skilled people can be deployed globally within ICF Finance, but we also collaborate with external organizations. Climate and ESG are complex, global issues, so working together with various partners, large or small, strengthens our ability to deliver results.
What is the outlook for Nigeria’s carbon markets?
Melkevik:
There is a bright future for their business due to a growing demand for Environmental, Social, and Governance (ESG) and climate change consulting. This is driven by the Nigerian government’s clear policies and the global focus on sustainability. International companies operating in Nigeria will also need to comply with these standards. Furthermore, the potential implementation of a carbon market in Nigeria creates opportunities for the company. They can advise businesses on how to prepare for carbon pricing and find ways to generate carbon credits for the local market. However, the speaker acknowledges the need for education and information dissemination as businesses adapt to these changes. Overall, the growing demand for ESG and carbon-related services makes the future promising for the company.
What are the carbon market opportunities that private companies can leverage to contribute more or less to their quota or to have a more sustainable future in the environment they live in?
Ogunleye:
The government, through the National Council on Climate Change (NCCC), will soon require all companies with over 25 employees to track and report their greenhouse gas emissions. This will help companies understand their environmental impact and create a plan to reduce emissions over time. The NCCC, working with the tax agency (FIRS), will enforce these regulations, effectively pushing companies to become more sustainable.
McCrackin:
The first step for companies is to get their inventory and know their emission level. You can’t show the change unless you know where you are. That is the one thing in my point of view where people should start getting that inventory for Scope 1, Scope 2 and where possible, scope 3.
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Melkevik:
I want to repeat what James said because it is quite serious meaning it’s quite important for private companies in Nigeria to be aware of. Companies in Nigeria with over 25 employees will soon be required by law to report greenhouse gas emissions. This new regulation is important for businesses to be aware of. While discussing future opportunities, it’s crucial to address this present need to comply with upcoming environmental regulations. By being proactive, companies can get ahead of the curve and prepare for stricter environmental standards.
As a major player in the sector, what are the biggest hurdles to overcome in terms of successful implementation of the Paris Agreement in Nigeria?
Ogunleye: The Paris Agreement aims to reduce greenhouse gas emissions. Ideally, all countries would cut emissions by 20 percent. This could increase to 47 percent with international support.
The key to achieving this is for each nation to understand its emissions by sector and company. This will allow for targeted reductions. For instance, the energy sector (oil and gas companies) could each be assigned a 20 percent reduction target.
People might think past efforts, like reducing gas flaring, are enough. However, these efforts are not directly tied to specific emission reduction goals.
The important aspect is accurately measuring greenhouse gas emissions by company. This will create a database to track progress towards meeting the Paris Agreement goals.
In terms of doing business in Nigeria, and of course Sub-Saharan Africa, what are the biggest hurdles or challenges you’ve faced in the last 15 years working in Nigeria?
Melkevik: I believe so much in Nigeria’s potential for business growth due to its young population, large market, and government policies. However, the complex operating environment discourages companies. The high cost and bureaucracy of bringing in foreign experts and the frequent tax audits, even for compliant businesses, make it difficult and expensive to do business in Nigeria. Despite these challenges, I love Nigeria and desire to operate there. I believe addressing the red tape would significantly improve the ease of doing business. It’s very difficult to be on record to talk about these things. I love Nigeria, I’ve lived here for seven years, and Jordan has lived here for 10 years. We want to be in Nigeria but sometimes it can be very challenging. The red tape makes it very difficult. I think it’s important to acknowledge that but we love Nigeria, we want to be in Nigeria, we want to do business in Nigeria. I get very passionate about Nigeria because I want Nigeria to succeed. After all, 220 million Nigerians deserve it to succeed.
What big projects are you working on now and what should we expect?
Melkevik: We are working with some big conglomerates.
McCrackin We are consulting for large conglomerates in the region. These companies are aware of the importance of ESG and are looking for strategic guidance. We’ve helped them navigate global and local trends, identify internal synergies, and develop ESG strategies. Additionally, we’re exploring credit opportunities for these players and identifying best practices from similar countries like Indonesia and Malaysia to bring fresh ideas to the region.
When should we start seeing a well-developed carbon market in Nigeria?
Ogunleye: 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.
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