Accelerating Nigeria's Transition to a Low-Carbon Economy: Carbon Pricing as a Strategic Option for Midstream and Downstream Industry

Abstract Nigeria faces significant challenges in reducing its carbon emissions and transitioning to a more sustainable economy. As an oil-producing nation, Nigeria's economy and energy sector remain heavily reliant on crude oil and gas production. However, with the impacts of climate change globally, Nigeria needs to take action to lower its environmental footprint in line with Nigeria’s Nationally Determined Contribution (NDC) as agreed at the 2015 Paris Agreement. The introduction of a carbon credit system in Nigeria signifies a substantial enhancement in value and serves as a system of incentives to encourage the reduction of carbon emissions. This system serves as an incentive encouraging industries in the midstream and downstream sectors to implement carbon emission-reduction processes. This paper investigates the procedures entailed in acquiring carbon credits within the sector industries in Nigeria, with a particular focus on the oil and gas industry. An assessment of the feasibility, applicability, expenses, advantages, and obstacles linked to the implementation of carbon credits is discussed including the utilisation of carbon credits by participants operating in the midstream and downstream sectors. This will involve the collation of publicly available emission data across the downstream and midstream, getting a broad spectrum of the emission levels, and then evaluating the feasibility of this strategy considering the costs and benefits involved. This paper emphasises the capacity of Nigerians to capitalise on innovation by demonstrating the carbon credit system as an alternative strategy to derive foreign direct investment. By examining a case study that encompasses an integrated value chain and complementary frameworks, this study demonstrates the potential for adapting this system to suit the distinct requirements of the oil and gas industries in Nigeria. This paper presents some recommendations for promoting the rapid implementation of the carbon credit system at sector-specific, subnational, and national levels in the midstream (filling stations and depots) and downstream industries. Implementation of the carbon credit system will attract foreign direct investment and promote sustainable methodologies towards the objective of diminishing carbon emissions.