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Carbon Pricing Mechanisms and Sustainable Development in Nigeria

Maryann Chinoyerem Akanugwo, a, Victor Akidi, b, Nneka Uchenna Nwankwo, c, Corresponding Author, b

Abstract

Utilizing greenhouse gas emission as key environmental indicator of sustainable development, this study empirically analysed Nigeria’s experience of the effects of carbon pricing mechanisms over the annual data time frame, 1990 to 2024. With carbon pricing mechanisms adopted as carbon tax, carbon trading, green tax and policy compliance rate, relevant data were gathered from Development Indicators of World Bank, Statistical Bulletin of Nigeria’s Central Bank, Bureau of Statistics of Nigeria, International Energy Agency, Climate Change Framework Convention of United Nations, and Economic Co-operation and Development Organisation. Applied as technique of analysis is the procedure of Autoregressive Distributed Lag framework. Established from the estimates are that; carbon tax, carbon trading, green tax and policy compliance rate had short and long runs negatively significant effects on Nigeria’s greenhouse gas emission for the sampled period. Concluding from the study outcome, carbon pricing policy measures have immensely contributed to reducing greenhouse gas emission thus, promoting Nigeria’s sustainable development. Considering the results and drawn conclusion, the study emphasized that government consistently strengthen expand and implementation carbon tax policy net across major emission-intensive sectors such as oil and gas, manufacturing, and transportation. Since the research outcome revealed significant reducing effect of carbon pricing on emission over short and long runs, revenues generated should be deliberately applied for environmental protection programmes, clean energy subsidies, and institutional capacity building to enhance emission-reducing benefits.

Keywords

Carbon Pricing MechanismsGreenhouse Gas EmissionSustainable DevelopmentNigeriaARDL JEL Classifications: H23Q56 Q58

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