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When Ontario elected its new premier on Thursday, the price of carbon in California fell.

Why? Because the Canadian province and California run a joint carbon market, so a carbon allowance traded in Ontario is essentially the same as an allowance traded in the Golden State. Doug Ford, Ontario’s next premier, has vowed to kill the local cap-and-trade program, a move that would sever its ties with the market.

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While California remains the dominant player in the joint carbon market, Ontario makes up about a quarter of it, said Colleen Regan, an analyst for Bloomberg New Energy Finance. Carbon allowances traded as part of the joint market for December delivery fell 10 US cents on Friday to US$15.05 a metric ton, according to David Nussbaum, a broker for Evolution Markets Inc.

“These elections do speak to the fragility of these programs,” Regan said. She noted that the market’s reaction was a bit muted because of an oversupply of allowances.

For its part, the California Air Resources Board, which oversees the state’s carbon market, said it has a mutually beneficial relationship with Ontario on climate issues and looks “forward to continuing that relationship with the new government.”

Ontario’s Ministry of the Environment and Climate Change declined to comment.

Bloomberg.com