• Tuesday, July 16, 2024
businessday logo

BusinessDay

The Nigerian climate change act – key highlights

CEOs see climate change disrupting supply chains, costs

Introduction

President Muhammed Buhari would be credited for taking a giant stride at the start of this decade on climate action both in Nigeria and globally by signing the Climate Change Act (CCA or the Act) into law on November 18, 2021. The enactment of the Act as the primary statutory framework for Nigeria’s energy transition drive is a firm indication of the country’s policy on the issue of climate change.

Sequel to the execution of international treaties like the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, climate change and the reduction of carbon emissions has been acknowledged as an issue of global concern.

Participating with other parties to the UNFCC in the 2021 UN Climate Change Conference (COP 26) in Glasgow, Nigeria, reiterated its commitment to achieving a net-zero global emission target by 2060.

With the passage of the Act, Nigeria joins a host of countries, including France and Sweden, in enacting local legislation targeting the reduction of Green House Gas (GHG) emissions and tackling climate change

With the passage of the Act, Nigeria joins a host of countries, including France and Sweden, in enacting local legislation targeting the reduction of Green House Gas (GHG) emissions and tackling climate change. Against this backdrop, this piece examines the critical highlights of the CCA and considers its possible impact in Nigeria.

Objectives and scope

The Act provides a legal and institutional framework for reducing GHG emissions to the atmosphere by ensuring the formulation of programmes and policies for such purposes. It keys into Nigeria’s international climate change obligations by setting a target for the years 2050-2070 to attain a net-zero GHG emission.

The provision of the Act broadly applies to all Ministries, Departments and Agencies of the Federal Government, and public and private entities within Nigeria. It mandates them to develop and implement mechanisms engendered towards fostering an environmentally sustainable and climate-resilient society.

National Council on Climate Change and the secretariat

The CCA establishes the National Council on Climate Change (the Council), a statutory body with perpetual succession vested with the powers to make policies and decisions on climate change in Nigeria. As part of the plethora of the Council’s climate change responsibilities, it shall drive the implementation of various sectoral targets and guidelines for the ultimate reduction of GHG emissions and other causes of climate change. It shall also have the obligation to approve and oversee the National Climate Change Action Plan (Action Plan) and administer the Climate Change Fund.

The President of Nigeria heads the Council as the Chairman and the Vice President as Vice Chairman. Other members shall include Ministers responsible for Environment, Petroleum Resources, representatives of women, youth, and persons with disability.

Establishment of climate change fund

The Act establishes a Climate Change Fund (the Fund) to be maintained by the Council, comprising of various funding sources, including sums appropriated by the National Assembly for the administration of the Council, grants, donations, fees for the services rendered by the Council and funding from International Organisations.

The Fund shall be applied towards various objectives like meeting the administrative cost of running the Council and all its offices, supporting climate change advocacy, and incentivising entities to transition to clean energy and sustain a reduced GHG emission.

Carbon Budget and Climate Change Action Plan

The Act mandates the Federal Ministries for Environment and National Planning to develop a carbon budget to keep the average rise in global temperature within 2°C and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels. In conjunction with the above Ministries, the Council, through its secretariat, will also be tasked in every five-year cycle to develop a National Climate Change Action Plan, the first of which is expected at a date not later than 12 months from the commencement of the Act.

Read also: Forward thinking; How sustainability will shape Africa’s business climate

However, such Action Plan must first be made available to the public for consultation and presented to the Federal Executive Council for approval.

Climate change obligations

The Act imposes climate change obligations on Ministries, Departments and Agencies (MDAs), private and public entities. These obligations are considered below:

MDAs

MDAs are required to establish a climate change desk to ensure the integration of climate change obligations into their core mandate and foster adherence to the annual carbon emission reduction targets in line with the Action Plan and Carbon Budget. The failure of an MDA to meet the carbon emission reduction target shall be reviewed. If found liable, its principal officers shall be sanctioned and, where appropriate, fined as may be determined by the Council.

Private entities

A private entity is defined as a body with functions of a private nature, including bodies registered under the Companies and Allied Matters. Although the Act imposes obligations on private entities, it sets a threshold for its applicability to entities with a minimum of 50 employees.

Such entities are obligated to put measures in place to ensure the achievement of carbon emission targets in line with the Action Plan. In the same vein, they are also required to designate a Climate Change Officer or an Environmental Sustainability Officer to submit annual reports of the organization’s efforts to meet carbon emission reduction targets to the Council’s Secretariat.

Public entities

These organisations provide services to the public on behalf of the Nigerian government. Unlike private entities, the Act does not give in clear terms the scope of public entities’ obligations. Instead, it acknowledges the Council’s power to impose climate change obligations on such entities. Notably, however, the Act provides inclusion in the Action Plan proposed incentives for both private and public entities to achieve GHG emission reduction. In view of this, it can be gleaned that public entities are also urged to contribute to the decarbonisation efforts of the country.

Conclusion

In conclusion, we acknowledge that the Act further reflects Nigeria’s commitment to addressing the issue of climate change as it provides the landscape to drive GHG emissions reduction. Its broad coverage and applicability are of particular comfort as it cuts across various sectors and corporate forms in its prescription of obligations.

However, at this point, one can only hope that the provisions of the CCA and its lofty ideals are implemented as envisaged, particularly given Nigeria’s economic reality, which is dependent on its oil and gas sector for foreign exchange earnings. Also, eliminating gas flaring will be critical for the attainment of gas emission targets and overall climate change objectives. It would therefore require an enormous amount of determination and will for the Act’s objectives to not only be implemented but fully realised.

Akaluzia is an Associate in the Enterprise and Corporate Governance Practice at Olaniwun Ajayi LP