Exploring the CO2 emissions drivers in the Nigerian manufacturing sector through decomposition analysis and the potential of carbon tax (CAT) policy on CO2 mitigation

Abstract The CO 2 emissions trend and their reduction potential in the Nigerian manufacturing sector from 2010 to 2020 were studied. Logarithmic Mean Divisia Index was applied decompose change into pre-set factors: carbon intensity effects, firm energy cost structure asset-turnover effect, asset-to-equity equity-funded production effect productive capacity utilization. results show that increased by $$1668\times {10}^{12}$$ 1668 × 10 12 GJ between 2020. Energy leading drivers of emissions, while utilization reduced emissions. throughout study, except for a few periods. Without tax policy, firm-level business-as-usual scenario. However, under 5% (CAT) policy scenario on consumption, there Furthermore, CAT consumption 22%. A further implication given its interaction with drivers, resulted lowering interactional findings indicate utilization, production, impacted variation.