California creates cap-and-trade system for CO2 emissions
By Bruce Geiselman

Sept. 1 -- California Gov. Arnold Schwarzenegger said his state will become a world leader in reducing greenhouse gas emissions because of an agreement his Republican administration negotiated with the Democratic controlled state Legislature.

"[Assembly Bill] 32 strengthens our economy, cleans our environment and once again establishes California as the leader in environmental protection," Schwarzenegger said Aug. 30.

The agreement was reached after the two sides resolved the governor´s concerns that the bill provide adequate flexibility to protect both the environment and the economy.

It creates a cap-and-trade system for carbon dioxide emissions.

The bill calls for limiting California´s global warming emissions to 1990 levels by 2020, while instituting a mandatory emission reporting system to monitor compliance. It also allows for market mechanisms to provide incentives for businesses to reduce emissions while protecting the environment, advocates said.

Environmentalists embraced the plan. "This is history in the making," said Ann Notthoff, the California advocacy director for the Natural Resources Defense Council.

However, some conservatives and business interests said the bill could prove disastrous for the state´s residents and businesses by driving up energy prices. It could also increase out-of-state generation from coal-fired power plants, further increasing greenhouse gas emissions, they said.

"What California has done today is to decide to become a Third World economy," said Myron Ebell, director of energy and global warming policy for the Competitive Enterprise Institute, a conservative think tank.