Odin Knudsen, the JPMorgan Chase & Co. managing director for environmental markets, resigned last month as the largest U.S. lender scaled back its climate-related practice.
Knudsen, 68, left the New York-based lender by mutual agreement after it became apparent the U.S. was not going to join a global system to trade carbon emissions, undermining the bank’s business plans, he said in a Nov. 21 phone interview. JPMorgan spokesman Brian Marchiony declined to comment.
“We’d all been geared up for the U.S. coming on board at some point,” Knudsen said. “The market pretty much died out.”
Knudsen, who once headed the World Bank Carbon Fund, is the second senior carbon markets banker to announce his departure this month after emissions credits and clean power stocks plunged in 2011. Investors deserted those markets as the United Nations plan for a global emissions cap remains gridlocked and European governments that subsidize most clean energy projects are battered by the sovereign debt crisis.
Benchmark EU carbon-emission permits have dropped 40 percent this year, falling to a record low today, while the Bloomberg Industry solar energy stocks index plunged 68 percent, undercutting investor interest in buying research and advisory services.
The value of carbon trading fell 8 percent to 23.7 billion euros ($32 billion) in the third quarter from the previous three months as the price of European emission permits slumped, according to Bloomberg New Energy Finance data.
“The price of carbon is so low that big emitters have other concerns at the moment, such as general global economic catastrophe,” said Matthew Cowie, a London-based carbon analyst at BNEF.
A record 1.5 billion tons of EU carbon permits was traded on the ICE Futures Europe exchange between July and 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.
UBS AG, the Swiss bank that lost $2.3 billion from unauthorized trading this year, in September shut its climate-change advisory practice and fired the staff, according to former vice chairman of the securities unit Jon Anda, who ran the team. Anda was fired along with his team.
Clean-energy analyst Ben Lynch left Commerzbank AG in the past two months, according to spokeswoman Claire Tappenden. The industry is being covered by Lauren Licuanan, a power analyst.
Biggest Carbon Portfolio
JPMorgan, which Knudsen said amassed the biggest investment portfolio of carbon permits, was tied for second place in producing new credits last year, behind Vitol Group and alongside Climate Change Capital Ltd., New Energy Finance said. JPMorgan sold its ClimateCare carbon offset developer to the unit’s management in August.
Knudsen, who worked 27 years at the World Bank before joining JPMorgan on Sept. 11, 2007, originally planned to leave earlier this year and was persuaded to stay on to assess the bank’s own environmental impact.
By the time he quit the environmental markets business “there were only a few of us left,” he said. The unit had employed several “tens” of people around the world at its height. He declined to give specific details of staffing numbers because the information is confidential.
He plans to develop his own company, Real Options International, offering carbon securities analysis, and may tap the emissions market that California is due to start in 2013.
The U.S.’s failure to join a global market “was a large disappointment,” Knudsen said. “You’re starting over again.”