Carbon traders cut from banks, 'shakeouts' as emissions trading prices shrink, European market, global conditions cited

12/3/11, "Carbon traders cut as climate talks stall," Sydney Morning Herald, from Bloomberg

"Investment banks are cutting traders and analysts in climate-related businesses as a slump in shares and carbon emission permits coincides with a deadlock in international climate talks.

JPMorgan Chase & Co. Managing Director for Environmental Markets Odin Knudsen left his post in New York by mutual accord after his team was shrunk, while UBS Securities LLC fired Vice Chairman Jon Anda and his Climate Policy Group co-workers, Anda and Knudsen said in interviews. Ben Lynch left his London job as an alternative-energy analyst for Commerzbank AG and it was taken over by a utilities analyst, company spokeswoman Claire Tappenden said. The departures took place since September.

The biggest banks, trying to recover from trading losses and a clampdown on investing their own money, are clipping resources from emissions-related businesses as United Nations talks have failed for years to extend Kyoto Protocol greenhouse-gas curbs beyond their expiration in 2012. The International Emissions Trading Association, the main carbon-market trade group, has seen its membership slide about 6 per cent this year.

“People are leaving the industry because they’ve been fired or because they see no prospects,” said Emmanuel Fages, head of energy research for Europe at Societe Generale SA in Paris. “That is the sad story.”

Climate talks

Fages said he used to work full-time on carbon at the French bank’s emissions trading unit Orbeo and the industry now occupies about 20 per cent of his time.

JPMorgan spokesman Brian Marchiony declined to comment.

UBS officials confirmed Anda’s departure and declined to give details about his department. “Jon Anda has left the bank and is seeking new opportunities,” UBS’s New York-based spokesman Christiaan Brakman said in an e-mailed response to questions. “UBS remains committed to address climate change.”

The Kyoto emissions caps for industrialized nations, which underpin carbon trading, are set to end in December 2012 unless United Nations-led talks under way in South Africa produce an extension.

Clean-power stocks and emission permits have plunged as the European Union, the biggest advocate for climate action among developed nations,

• is ravaged by its own sovereign debt crisis.

Benchmark EU carbon permits lost 44 per cent in the year through yesterday and fell to a record last week while the Bloomberg Industry solar energy index plunged 65 per cent, damping investor demand for research and advisory services.

EU allowances for delivery this month fell 0.4 per cent to 7.90 euros a metric ton today as of 8:14 a.m. on London´s ICE Futures Europe exchange. The Bloomberg Industry Global Leaders Large Solar Energy index fell 0.6 per cent, headed for its first decline this week.

'Shakeouts, departures'

“There are shakeouts and departures happening as you would expect to be the case during any market that was a little bit unsure about where it was going,” Henry Derwent, president of the International Emissions Trading Association, said in a telephone interview. Carbon trading “is currently suffering, as so many other markets are, from low economic activity

• in the main area which is the European Union.”

About 10 institutions have withdrawn from the Geneva-based trade group this year, cutting membership to about 150 companies, spokeswoman Noria Mezlef said.

EU countries, which subsidize clean energy and bought more than 80 per cent of solar panels last year as well as running the biggest carbon market, are facing pressure to rein in budget deficits as investors dump their sovereign debt. The turmoil wracking the bloc has

• hurt photovoltaic equipment stocks and businesses that service that industry.

'Little companies'

“It been a tough time for everyone doing solar,” John Hardy, who lost his job in New York as an alternative energy analyst at Gleacher & Co. in August, said in an interview. “Market capitalizations have dropped to a point where funds can’t touch these little companies.”

He said he expects some of his colleagues and competitors will also be let go because the market valuation of

• the industry can no longer sustain their research.

Dennis Mignon left his job as a carbon trader at First Climate in Bad Vilbel, Germany, to trade government bonds at DZ Bank AG in Frankfurt, he said last week.

The value of carbon trading fell 8 per cent to 23.7 billion euros ($US32 billion) in the third quarter from the previous three months as the price of European emission permits tumbled, according to [Bloomberg] New Energy Finance data.

ClimateCare

UBS shut its climate-change advisory practice and fired its staff after the Swiss bank lost $US2.3 billion from unauthorized trading this year.

JPMorgan, which sold its ClimateCare carbon offset developer to the unit’s management in August, tied for second place producing new credits last year, behind Vitol Group and alongside Climate Change Capital Ltd., according to Bloomberg New Energy Finance data.

The New York bank cut back its environmental markets team to just “a few” people compared with several “tens” of people around the world at its height, Knudsen said in an interview.

Societe Generale said Nov. 25 it agreed to sell its 50 per cent stake in carbon trading joint venture Orbeo to its partner Solvay SA. The Paris-based lender will develop emissions trading as part of its gas and power business, deputy head of commodities Jonathan Whitehead said in a telephone interview.

“The emissions market, whatever shape or form it ends up continuing in, is going to be an important part of our offering for our clients,” he said Nov. 25.

• “The emissions market goes hand in hand with the power market in Europe.”

A record 1.5 billion tons of EU carbon permits was traded on the ICE Futures Europe exchange from July to September even as the price slump cut the value of the transactions, exchange data show. Trade

• in UN carbon credits was a record 348 million tons in the same period."

via Tom Nelson