Discussion Papers

July 7, 2017

Climate Policy and Finance: Designing an Effective Carbon Pricing System for Nigeria’s Oil and Gas Sector

Carbon
pricing has been recognized not only as the most efficient economic policy
instruments to internalize the social cost of emissions, but also as a major
tool to generate public revenues that can be used to offset the potential
adverse distributional effects of climate policy. However, in many developing
countries, there is a widespread reluctance to commit to climate policy,
largely due to financial constraints, a lack of public support, and concern over
its regressive effects.This paper makes recommendations
towards the design of an effective carbon pricing
system that not only discourages air pollution but also encourages the gradual
uptake of climate-friendly technologies by the private sector in Nigerias oil
and gas sector, while supporting public investment in sustainable
infrastructures and projects that offset the distributional effect of the
climate policy.

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Carbon pricing has been recognized not only as the most efficient economic policy instruments to internalize the social cost of emissions, but also as a major tool to generate public revenues that can be used to offset the potential adverse distributional effects of climate policy. However, in many developing countries, there is a widespread reluctance to commit to climate policy, largely due to financial constraints, a lack of public support, and concern over its regressive effects.This paper makes recommendations towards the design of an effective carbon pricing system that not only discourages air pollution but also encourages the gradual uptake of climate-friendly technologies by the private sector in Nigeria’s oil and gas sector, while supporting public investment in sustainable infrastructures and projects that offset the distributional effect of the climate policy.




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