In this episode of Sustainability Talks, Michael Avery is joined by Toby Campbell-Colquhoun, Head of Carbon markets at RMB, and Franz Rentel, Managing Director for South Africa at Anthesis Group, to examine how carbon credits work in practice. They unpack what a carbon credit is, how voluntary and compliance markets differ, who defines the rules, and where risk and accountability sit. They further explore the conditions under which Carbon markets can deliver real emissions reductions, unlock investment in African projects, and contribute meaningfully to long-term climate goals.
RMB | Sustainability Talks - Episode 4: Carbon markets – the most contested intersections in sustainable finance
What was discussed
Carbon credits and markets - Driving credible climate action in South Africa
Carbon credits are becoming a key part of the battle to reduce greenhouse gas emissions and protect the environment.
In the latest Sustainability Talks podcast episode, Michael Avery hosts a discussion about how Carbon markets are evolving and what this means for South African businesses and investors.
Avery is joined by Toby Campbell-Colquhoun, Head of Carbon markets at RMB, and Franz Rentel, Managing Director for South Africa at Anthesis Group.
These experts provide a clear overview of the important role carbon credits play in decarbonisation.
Defining carbon credits
A carbon credit represents one metric tonne of carbon dioxide equivalent that has either been avoided, or removed from the atmosphere.
Organisations can pay for these credits, effectively funding external sustainability efforts to reduce carbon emissions.
These credits are important for businesses that have carbon emissions they cannot eliminate immediately – or if doing so would be economically unviable.
It helps these organisations take strides to becoming carbon neutral, even if they have operations where carbon emissions are unavoidable.
Pricing challenges
Campbell-Colquhoun explained that there are about 80 different carbon credit prices under different schemes across the world.
“As a carbon purist going back 25 years, I came out of university believing there would hopefully be one global price - but that's not the way it works,” he explains.
“Each scheme is defined by the specific targets that they have set. So you can have a very wide variety or prices between different schemes and a lot of the schemes don’t link.”
This means you can’t currently buy a carbon allowance in Europe, and use that to offset your emissions in South Africa.
As a result, developing South Africa’s Carbon markets is crucial.
Compliance markets vs voluntary markets
According to Rentel, there are two types of Carbon markets in South Africa – compliance markets and voluntary markets.
Compliance markets revolve around laws and regulations – such as South Africa’s carbon tax of 2019.
“Companies have to report on their emissions, and if they’re above a certain threshold, they have to pay carbon tax,” says Rentel.
When designing the carbon tax, the government intentionally ensured that the relevant carbon credits are priced lower than the tax – meaning companies can viably use carbon offsets to save money.
This incentivised businesses to begin the process of decarbonising.
In contrast, voluntary markets are powered by corporate sustainability goals, rather than lowering tax amounts.
These are targeted at businesses that want to strive towards more than the government carbon threshold – instead trying to become carbon neutral.
The opportunity in South Africa
Rentel says that there is a huge opportunity for more carbon credit projects to be launched in South Africa.
“We estimate the market has about 12 million tons per year in demand for carbon credits,” he says.
This means that there could be up to 50 million tons of demand until 2030 – with the carbon price being set until the end of the decade.
Locked carbon pricing is a key benefit of developing a carbon credit project in South Africa, as many other markets do not have this pricing stability.
As a result, carbon credit projects are incentivised to enter the South African market.
“If you’re using an average price of R300 per ton, you’re looking at about an R18 billion market between now and 2030,” says Rentel.
Currently, there is about 2 million tons of supply per year – far below the 12 million tons of demand.
This means there is a massive gap in the market for new carbon credit projects.
A global vision
“We believe that carbon pricing is a central part of driving a low carbon future. It is not the only part – but it is essential,” says Campbell-Colquhoun.
He added that an important next step is for global markets to encourage fungibility between the price of a common credit among different schemes.
“We have talked about that for a long time, but the UN is starting to set the platform to enable that to actually happen,” he says.