CARBON TAXATION IN NIGERIA: ASSESSING ITS LEGAL FRAMEWORK AND FISCAL VIABILITY

Abstract

Nigeria’s heavy reliance on petroleum revenue had long exposed its fiscal system to volatility arising from global oil price fluctuations. As a Party to the United Nations Framework Convention on Climate Change 1992 and the Paris Agreement 2015, Nigeria was under increasing pressure to adopt market-based mechanisms such as carbon taxation to reduce greenhouse gas emissions. The article examined the fiscal viability of carbon taxation in Nigeria within the context of its evolving climate governance framework. It examined the statutory basis for environmental taxation, which included the Climate Change Act 2021, the Petroleum Industry Act 2021, the National Climate Change Policy 2021–2030 and Nigeria Carbon Market Activation Policy 2025, and evaluated carbon taxation as a revenue-generating instrument for climate finance. The article adopted doctrinal methodology with comparative insights from the United Kingdom and South Africa. The article contended that although carbon taxation offered significant potential for revenue diversification and sustainable finance, its implementation in Nigeria was constrained by legal ambiguities, institutional limitations, and entrenched dependence on petroleum revenue, among others. The article recommended the enactment of a carbon tax law, strengthening the institutional capacity and coordination of the National Council on Climate Change, accelerating just transition to a low-carbon economy, among other fiscal reforms necessary to implement carbon taxation in Nigeria.