Climate Change Capital Ltd may cut staff this month as its new owner, U.S. agriculture and food company Bunge Ltd. (BG:US), seeks to reduce costs after its purchase of the London-based carbon-project developer and adviser.
“There will be cost reductions before the end of the month,” Alfred Evans, today named chief executive officer of Climate Change Capital, said in a phone interview from Geneva. The company’s 65 employees have already been told, he said, declining to provide details on potential cuts. Evans was previously chief investment officer for Bunge’s carbon assets.
Bunge, based in White Plains, New York, bought the climate business for an undisclosed sum in a deal that closed today. Low carbon prices probably represent a buying opportunity and Bunge is building a global climate-protection business, Evans said.
United Nations Certified Emission Reduction credits for December, the benchmark, dropped to a record this month because the European Union carbon market is oversupplied through this year and beyond, according to Bloomberg New Energy Finance. The contract fell 3.7 percent today to 3.89 euros a ton on the ICE Futures Europe exchange in London as of 2:52 p.m. It reached an all-time low of 3.27 euros a ton on April 4.
“You make most of your money by investing at the bottom of the business cycle,” he said.
‘Some Gloom Misplaced’
“There’s a lot of doom and gloom,” Evans said. “A lot of it is misplaced. We are definitely somewhere near the trough.”
Investors in carbon funds managed by Climate Change Capital are not seeking to exit, Evans said. That has not been the subject of our communications with them, he said. Whether some assets come up for sale depends what’s in the interests of those investors, Evans said.
Some emission-reduction offsets, such as projects to cut greenhouse gases at landfill sites in Mexico, may be re-badged for new carbon markets as they proliferate, including California (EMISCCA2), Australia and Japan, as well as voluntary programs, Evans said.
UN climate negotiators have so far failed to extend or replace the 1997 Kyoto Protocol, whose targets for most developed nations run through this year.
“We think there are some great opportunities in the carbon market,” Evans said. “The trajectory has turned into a period of fragmentation.”
Climate Change Capital was also attractive because of its property fund, he said. The company has invested more than 68 million pounds ($108 million) in commercial property, including an office-and-retail block in Birmingham, England, where carbon output was cut 43 percent.
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