Carbon Pricing as a Regulatory Mechanism for Green Technological Transition: Comparative Lessons from South Africa and the European Union for Nigeria

Abstract

Carbon pricing is a major regulatory tool in international climate change policies and has transformed environmental law from command-and-control to market-based approaches and finally to decarbonisation. Carbon pricing mechanisms, such as carbon taxes and emissions trading systems (ETS), are mechanisms that put an economic price on Greenhouse Gases (GHGs) which embed environmental externalities and encourage technological innovations that are practical and friendly for climate change control. The EU has a well-established carbon market (EU Emissions Trading System – EU ETS), while South Africa has implemented a carbon tax regime designed for its developmental context. Although Nigeria has committed to a climate transition under the Paris Agreement and the Climate Change Act 2021, they have yet to establish a coherent framework for carbon pricing that is beneficial for a meaningful technological transition. This paper is a critical investigation of the concept of carbon pricing as a regulatory tool for green technological transition, with comparative lessons from the EU and South Africa for Nigeria. It uses a doctrinal and comparative legal approach to examine international climate instruments, regional climate law and domestic climate law. The piece challenges the notion of carbon pricing as a pure fiscal measure and instead calls for it as a more powerful regulatory tool to support the growth of renewables, industrial decarbonisation and innovation. It recommends that the Nigerian government should put in place a hybrid carbon pricing framework based on institutional enhancement, legal adjustments, and adoption of green technology solutions for the country to meet its Net-Zero targets.