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London Banks Quit Carbon Trading

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Jim Pickard and Ajay Makan, Financial Times

At least 10 London banks have scaled back or closed their carbon trading desks amid turmoil in the European emissions trading scheme.

 

The fledgling market was once seen as a promising growth area, with the City of London Corporation predicting in 2006 that London would become the leading provider of services to the “mushrooming” sector.

But the number of City workers employed on carbon desks has fallen by 70 per cent in the past four years, according to Anthony Hobley, president of the Climate Markets & Investors Association.

The workforce had fallen from close to a thousand to just a couple of hundred, Mr Hobley estimated, as carbon prices have plummeted.

Under the trading scheme, companies buy and sell permits that each give the right to emit a tonne of carbon without penalty.

This was supposed to provide a powerful economic incentive for industries to cut the greenhouse gas emissions blamed for climate change.

But the price of a permit has fallen persistently because there are too many permits in the system – reducing the cost pressure on polluters.

A report by the Institute for Public Policy Research, a left-leaning think-tank, warns that problems within the emissions trading system (ETS) – the world’s largest carbon market – pose a “serious risk” to London’s status as the home of carbon finance.

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