Parched: How California's drought impacts the carbon market

“When the well is dry, we know the worth of water.”

―Benjamin Franklin

California’s emissions trading scheme (ETS) accounts for roughly 85% of all emissions in the state and covers large electric power plants including power imports, large industrial plants, and natural gas and petroleum distributors.

One of the most important factors affecting the demand for California’s carbon allowances (CCAs) is the proportion of power generation that comes from renewables, and hydroelectric in particular - and that’s why water levels and the existence of drought is so important.