Carbon Border Adjustment Mechanisms (CBAM), Nigeria’s Export Structure, and the Green Trade Transition Challenge

Abstract

The European Union’s Carbon Border Adjustment Mechanism (CBAM), which commenced gradual financial implementation in January 2026, poses significant challenges for emerging economies such as Nigeria. Nigeria’s non-oil exports, including iron, steel, cement, aluminium, and fertilisers, are vulnerable to reduced competitiveness and declining trade revenues due to their carbon intensity. This
paper examines Nigeria’s exposure to CBAM-covered sectors, estimates potential fiscal and trade diversion effects, and evaluates current policy responses. Using data from the International Trade Centre (ITC), European Commission, International Energy Agency (IEA), and the National Bureau of Statistics (NBS), the study finds that Nigeria’s CBAM-exposed exports, though relatively small, are concentrated in
sectors with weak decarbonisation capacity and limited domestic carbon-pricing mechanisms. The paper recommends a three-pronged strategy: accelerating carbon-pricing reforms, strengthening trade diplomacy through AfCFTA and EUAfrica partnership frameworks, and promoting export diversification towards lowcarbon industries. Without coordinated reforms, CBAM may deepen Nigeria’s trade competitiveness challenges and undermine ongoing macroeconomic stabilisation efforts.