Exploring the Implication of EU’s Carbon Border Adjustment Mechanism on Nigeria

The EU’s Carbon Border Adjustment Mechanism (CBAM) aims to ad dress the problem of carbon leakage and enhance the competitiveness of EU local producers by imposing carbon tax on imports from non-EU nations. However, CBAM will have significant economic implications for developing countries, including Nigeria, who have not established carbon tax policy similar to the EU’s Emission Trading System (ETS). Nigeria is one of the major exporters to the EU but does not currently have a carbon tax policy that is aligned with the EU’s ETS. This potentially puts additional compliance costs on Nigerian Exporters, raising the price of their products in EU market and loss of competitiveness. This paper aims to explore the impacts of CBAM on Nigeria’s exports. The article argues that given that Nigerian does not currently operate a compliance carbon pricing regime, CBAM could have significant effect on the country’s exports to the EU. It proposes a stronger legal framework that promotes transparency and integrity of Nigeria’s carbon market system and long-term policy alignment with the EU’s carbon trading system.