The JSE, the company that operates Africa’s largest stock exchange, is investigating the possibility of a carbon trading market as SA’s energy market is set to open up after President Cyril Ramaphosa announced plans to end persistent power cuts at Eskom.
The JSE has been looking at a carbon trading market for “some time”, group CEO Leila Fourie said in an interview with Business Day on Tuesday after the company released its interim results to end-June.
“We’re looking at options and we are hoping to fast-track that. We will come to market as soon as we have a well-formulated plan in delivering a carbon market,” she said.
Carbon trading is the buying or selling of carbon credits allowed to companies and entities to emit a certain amount of greenhouse gases. The value of the global market for such permits topped €760bn in 2021, according to the annual Refinitiv Carbon Market Year in Review.
Ramaphosa said last week that fixing Eskom and fast-tracking the state’s renewable energy procurement processes are key to keeping the lights on.
The strategy he announced also called for faster procurement by the state of renewable energy, gas and battery storage by, for example, “maximising” the capacity of wind and solar that can be procured through bid window 6 of the Renewable Energy Independent Power Producer Procurement Programme.
SA could see a boom in the number of renewable energy companies and existing ones looking to grow to fill the gap created by the woes at Eskom as the government cuts red tape and opens the door to new energy producers.
Funding
Fourie believes listing on the JSE is an “obvious potential source of funding” for the energy transition as new power producers look for capital and existing companies look to scale up their operations.
In June, the JSE released its sustainability and climate disclosure guidance as part of its efforts to promote transparency among listed companies on their environmental, social and governance disclosures.
Fourie said on Tuesday the guidance had been well received as it looked to come in line with global standards.
The JSE’s green bonds and sustainability bonds are two to three times oversubscribed, she said, which will help renewables and independent power producers, while transition bonds support power companies wanting to move away from coal to greener power sources.
She was speaking to Business Day after the exchange operator released a half-year earnings report that showed profits rose more than a quarter, thanks to higher interest rates and a push into new services, such as market intelligence and shareholder management.
Analysis
The JSE’s revenue depends on the level of market activity, with its market share by value of trade at 99.7%. The firm said on Tuesday that it had maintained this, while its JSE Investor Services (JIS) business was winning new clients.
Regulators approved the JSE’s acquisition of Link Market Services in 2020, and this business line includes registry management, shareholder analysis and advisory services. In June 2021, the JSE acquired an additional 25.15% interest in JIS for R75.45m, giving it full control.
JSE Ltd ended 3.35% higher at R112.08 on Tuesday.
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