Subsidy Removal: Why Carbon Fee And Dividend Is A Better Policy Option

Barely a month ago, the Federal Government through the Minister of Finance, Budget and National Planning, Zainab Ahmed, revealed a policy plan by the government to remove fuel subsidy on Petroleum Motor Spirit (PMS) in February 2022 and a target date of mid-2022 for the complete elimination of fuel subsidies in Nigeria, adding that Nigerians would get N5,000 per month as a transportation grant after the removal of fuel subsidies.

The minister further explained that the Federal Government would give N5,000 to 30 to 40 million poorest Nigerians to cushion the potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40 per cent of the population.

Obviously, this ambitious and courageous plan of the Federal Government which was announced few days after President Muhammadu Buhari signed the Climate Change Bill into law and Nigeria’s pledge at COP26 in Glasgow to reach Net-Zero in 2060, is a major step in implementing the Glasgow Climate Pact. However, to make this policy more comprehensive, it is pertinent in my opinion, for the government to consider the harmonisation of the policy to include Carbon Fee and Dividend, which is also referred to as Climate Income.

Interestingly, Carbon Fee and Dividend policy is currently operational in Canada and this can also help President Muhammadu Buhari’s plan to lift 100 million persons out of poverty in 10 years, as well as make Nigeria’s build back better to post COVID-19 achievable.


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