Carbon markets are unlike any other financial market, operating with their own unique set of performance drivers and risks. While this distinction is what makes California carbon allowances an attractive alternative investment opportunity for its uncorrelated diversification* benefits, it also means investors have to educate themselves on the key market drivers both at the individual program level and at the state / national level. Policy is one of their main drivers, including regular program regulatory reform as well as state and federal-level climate initiatives. The role of policy in cap-and-trade programs has received increasingly more attention as California finalizes its reform package and with the November election imminently on the horizon. In this report, Oktay Kurbanov, partner at Climate Finance Partners (CLIFI), explores how past political influences have shaped California’s carbon market and what could lie ahead with potential shifts in policy. The KraneShares ETC programme for EU gatekeepers and UK financial professionals provides unique exposure to the four largest, most liquid carbon allowance futures markets, including the California market, through an ETC Series.

Report Contents:

• Impact of presidential elections on California’s carbon market
• Historical analysis of local state political trends
• Latest California market reform updates

*Diversification does not ensure a profit or guarantee against a loss.

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