Operating Africa’s biggest stock and bond exchanges, the JSE is now introducing the continent’s nascent carbon market.
The company, based in Johannesburg, revealed that it has opened a market for carbon credits and renewable energy certificates with Xpansiv, meant to provide infrastructure to trade what it terms environmental commodities.
In an interview, the JSE’s director of capital markets, Valdene Reddy said: “We are putting the plumbing in place. We are looking to position this as a solution across the continent.”
South Africa may not be the continent’s biggest producer of carbon credits, but 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.
South Africa also happens to be Africa’s biggest producer of solar and wind power, boosting its potential to have projects issue renewable energy certificates, and one 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.
Each renewable energy certificates represents a unit of power generated from renewable sources, which can be traded to offset emissions.
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 in Africa.
According to an estimation by BloombergNEF, 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. The JSE may compete with CYNK, a Kenya-based African offsets platform, and a carbon-markets exchange planned in Mauritius.
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.
