Do Regulatory Tariffs Curb Gas Flaring? Evidence from Nigeria

This study investigates the impact of flare tariff on the volume of gas flared in Nigeria. Using 52 years data, we find that the imposition of flare tariffs significantly reduces the volume of gas flared; however, the extent of this reduction varies depending on the stringency of the tariff. To better capture these differences, the analysis distinguishes between tariff regimes implemented before and after 2018, when a more substantial tariff was introduced under new regulations. The results reveal that pre-2018 tariffs led to a minimal reduction of 0.08% in gas flaring volumes, whereas post-2018 tariffs resulted in a more pronounced reduction of 6.92%. Other factors that significantly influence gas flaring volume include oil production and oil price. These findings underscore the importance of setting adequate flare tariffs to achieve meaningful reductions in global gas flaring.