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Africa: Recent developments in carbon markets

9 November 2023
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Overview

  • Today (9 November), the Johannesburg Stock Exchange, which operates Africa’s largest stock and bond exchange, launched its recently announced carbon market in collaboration with Xpansiv, an infrastructure provider for global environmental markets.
  • The new market will operate under a separate entity called JSE Ventures and is intended to allow local participants to buy or sell carbon credits and energy certificates, that are held in either local or global registries.
  • This development come at an interesting inflection point for carbon markets globally. Market supply is constrained, and there is a justifiable increase in the focus on greenwashing, and related low-priced or junk credits that make limited environmental impact.
  • Notwithstanding these challenges, we see great potential for carbon projects and related credits to positively contribute towards combatting climate change.

Today (9 November), the Johannesburg Stock Exchange, which operates Africa’s largest stock and bond exchange, launched its recently announced carbon market in collaboration with Xpansiv, an infrastructure provider for global environmental markets.  The new market will operate under a separate entity called JSE Ventures and is intended to allow local participants to buy or sell carbon credits and energy certificates, that are held in either local or global registries.

Such trade of carbon credits forms part of broader global efforts to reduce green-house gas emissions, which are gathering momentum and urgency.  The September northern hemisphere heat waves demonstrate the crisis in very tangible terms, having been described by climate scientist Zeke Hausfather as ‘absolutely gobsmackingly bananas’.

These developments come at an interesting inflection point for carbon markets globally.  Market supply is constrained, and there is a justifiable increase in the focus on greenwashing, and related low-priced or junk credits that make limited environmental impact.

Notwithstanding these challenges, we see great potential for carbon projects and related credits to positively contribute towards combatting climate change. We are actively involved in various emerging carbon exchanges and carbon projects in a number of African jurisdictions, including in Kenya, Rwanda, South Africa, Tanzania, and Zambia. In addition to contributing towards the mitigation of climate change, these projects, if developed and operated properly, can result in numerous other potential benefits, including community upliftment and employment, and the generation of new and diversified income streams that boost the economy.

Our team provide an overview here of recent developments in African carbon projects and related credits within the context of global developments, and highlight some of the issues, and legislative developments, affecting these projects.