Decarbonization strategies in Nigeria’s industrial firms: analysis of emissions trends and drivers using LMDI decomposition, ARIMA forecasting, and decay models

In alignment with Nigeria’s 2030 emission reduction targets and climate action commitments, the manufacturing sector must urgently transition to low-carbon operations to support sustainable development. This study applies the Logarithmic Mean Divisia Index (LMDI) to examine the drivers of CO₂ emissions in seven sub-industries: Livestock/Agro-allied, Food and Beverages, Hotels and Catering Services, Chemical and Pharmaceutical, Textile and Footwear, Non-metallic Products, and Other Manufacturing over the period 2000–2020. Emission pathways for 2021–2030 are projected using AutoRegressive Integrated Moving Average (ARIMA) and Exponential Decay models under three scenarios: Business-as-Usual (BAU), Energy Efficiency (EEF), and Technological Development (TECD). The results indicate that fuel oil and diesel are the primary contributors to emissions growth. The energy intensity effect significantly raised CO₂ emissions by 79.01 Mt-CO₂, while the income effect offset emissions by 49.22 Mt-CO₂. The Chemical & Pharmaceutical, Other Manufacturing, Textile & Footwear, and Hotels & Catering Services sub-sectors recorded the most significant increases in emissions. Under the BAU scenario, emissions are projected to continue rising without policy intervention. The EEF scenario achieves moderate reductions (15.97%–39.18%) through improved energy efficiency, whereas the TECD scenario delivers the highest reductions (47.44%–62.95%) via a 5% annual shift in the energy mix and a 2% annual decrease in energy intensity. The study recommends targeted policies that enhance energy productivity, expand renewable energy adoption, and accelerate technological innovation as critical strategies for achieving sustainable emissions reduction in Nigeria’s manufacturing sector.