LONDON (Reuters) - Market operator Intercontinental Exchange Inc. is laying off staff at newly acquired U.S. environmental bourse the Chicago Climate Exchange (CCX), industry sources told Reuters, citing a lack of U.S. action on climate change.
They said the first round of layoffs began on July 23 and, although the total number of jobs to be cut was unknown, one said around 25 employees, or roughly half CCX’s headcount at the time of ICE’s acquisition, had already been or were being let go.
ICE would not confirm or comment on the layoffs.
“ICE just came in one day and started hacking away ... We were told the company was restructuring,” said one source, who declined to be named.
Another said ICE cut around 20 roles at the CCX late last month, and at least another six high-level layoffs would come before next spring.
ICE bought Climate Exchange plc, owners of the CCX as well as London’s European Climate Exchange (ECX), the world’s largest marketplace for carbon credits, in April for 395 million pounds ($622 million), despite failed UN climate talks in Copenhagen last December and a lack of U.S. action on climate change.
CCX founder Richard Sandor had hoped the exchange would become the hub for a national regulated market for greenhouse gas emissions to be kick-started by a U.S. climate change bill.
But prices for the carbon credits traded on the bourse since its 2003 launch, which were based on voluntary but legally binding emissions reduction commitments by its members, have crashed to around 10 cents a tonne from all-time highs of over $7 in 2008, and trading volumes have largely dried up.
Last week, ICE chairman and CEO Jeff Sprecher said the CCX may be pared due to a lack of profitability and that ICE is now seeking feedback about what to do with the exchange.
ICE’s main focus in buying Climate Exchange was the ECX, which handles some 90 percent of exchange-traded carbon credits globally and was largely behind its parent company’s maiden pretax profit of 2.2 million pounds in 2009.
CCX president and CEO Satish Nandapurkar is reported to be staying at the bourse while ECX head Patrick Birley has said he will leave his post by October. No other layoffs have been reported at ECX or other Climate Exchange offices.
Sandor will serve as adviser to ICE, company sources said.
Some blamed inaction on climate change by the U.S., the world’s number two greenhouse gas emitter, for the job losses.
Although the U.S. has vowed to cut its greenhouse gas emissions by 17 percent below 2005 levels by 2020, and despite the House of Representatives narrowly passing an ambitious climate bill in June 2008, several similar bills have stalled in the Senate in the past year.
“(The layoffs) seem to indicate that this market player thinks any U.S. climate action is still a way off,” said commodities house FCStone in a July 27 blog on its website.
“This is unfortunate not only for the climate implications based on U.S. inaction but also for the number of really talented staff the CCX had to let go.”
Additional reporting by Timothy Gardner in Washington; Editing by James Jukwey