Carbon traders fear pink slips

Reuters reports that, “Wall Street was supposed to become the capital of a global carbon trading market worth a trillion dollars a year but now many who thought green trading desks would be the next big thing are fearing the pink slip.

U.S. banks had looked forward to a huge “cap-and-trade market” a system where companies would buy and sell the right to emit gases blamed for warming the planet. Many hired carbon traders, picked up assets, and trained members of energy desks to deal in emissions markets.

But prospects for a broad U.S. carbon market have dimmed. U.S. Senator Lindsey Graham, a Republican working on a compromise climate bill, declared economy-wide cap-and-trade “dead” this month.

At least one bank with carbon trade assets has already been hit. EcoSecurities, a clean energy project developer and carbon trader, bought by JP Morgan Chase last year has closed its New York-based U.S. office leading to a loss of up to 20 jobs.

JP Morgan has said a senior carbon trader, who had recently moved to Washington, is leaving the bank this month. Banks that that did not expand in advance of a cap-and-trade bill may not have to cut much staff, but long-anticipated expansions will not happen either.

“It’s like all-out war,” Peter Fusaro, an expert at Global Change Associates in New York, said about the political and market odds stacked against creation of a big carbon market. Many in green groups, banks and the government had hoped the United States would anchor a global market worth up to $2 trillion a year by 2020.

Doubts about formation of a big U.S. market have filtered down to decimate prices in U.S. regional and voluntary corporate cap-and-trade programs formed in the absence of federal action on climate.

The problems extend to would-be carbon traders abroad. As the world struggles to agree a new pact to fight global warming, prices in the E.U.’s carbon market have fallen to about half of what they were in 2008. Australia’s national carbon plan is stalled and faces a third defeat in May.

Without creation of a U.S. market on emissions from tailpipes to smokestacks, the Obama administration must find different ways to meet President Obama’s goal of cutting emissions 17 percent by 2020 under 2005 levels.”

Source: Reuters