JSE launches market for carbon credits

The JSE, which operates Africa’s biggest stock and bond exchanges, has made its play to corner the continent’s nascent carbon market.

The Johannesburg-based company has started a market for carbon credits and renewable energy certificates with Xpansiv, which provides infrastructure to trade what it terms environmental commodities, it said on Thursday.

“We are putting the plumbing in place” to trade these securities, Valdene Reddy, the JSE’s director of capital markets, said in an interview. “We are looking to position this as a solution across the continent.”

While South Africa is not the continent’s biggest producer of carbon credits, it is the region’s largest emitter of greenhouse gases. With the country rolling out a carbon tax, the market for offsets is set to surge. The nation is also Africa’s biggest producer of solar and wind power, boosting its potential to have projects issue renewable energy certificates.

A single carbon credit represents a ton of climate-warming carbon dioxide or its equivalent either removed from the atmosphere or prevented from entering it in the first place. Renewable energy certificates each represent a unit of power generated from renewable sources, which can be traded to offset emissions.

Forestry

Across the continent, governments have been putting in place regulations as they try to boost income from the carbon-credit trade, generated mainly from carbon-absorbing forestry projects across Africa. The global carbon-credit market is currently worth US$2-billion. The industry is projected to grow to as much as $1-trillion/year in 15 years, according to an estimate by BloombergNEF.

The JSE may compete with CYNK, a Kenya-based African offsets platform, and a carbon-markets exchange planned in Mauritius.

Read: EU carbon border tax: Africa stands to lose billions

The carbon market “could be very meaningful for us as a country and continent north of five years”, she said, referring to its long-term potential.  — (c) 2023 Bloomberg LP

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