The legislation would mandate large industrial and commercial consumers to cut greenhouse gas emissions by about 25% by 2020 through a ‘cap and trade’ programme.

The bill requires the State Air Resources Board to adopt regulations to require the reporting and verification of state-wide greenhouse gas emissions and to monitor and enforce compliance with a state-wide greenhouse gas emissions limit equivalent to emissions levels in 1990 to be achieved by 2020.

While full details of the bill have not yet been disclosed, the governor is understood to have obtained from legislative leaders the flexibility to change the programme if it inflicts economic damage.

A second bill also due to be signed in the next month would restrict utilities from signing long-term base-load contracts from coal-fired stations without carbon capture.

The emissions programme would be the toughest greenhouse gas requirement nationwide. Nonetheless, power companies supported the move with Peter A. Darbee, chairman, CEO and president, of PG&E Corp saying: “We’re supporting this legislation because we are convinced that climate change is an urgent problem and action is needed now. By combining market-based mechanisms and enforceable emissions reductions, this bill strikes the right balance between improving the environment and protecting the economy.”

Government and energy industry leaders in the state further suggest that California greenhouse gas emitters may be able to trade emissions credits under the European Union Emissions Trading Scheme (EU ETS) by 2012.

In a separate move, Governor Schwarzenegger has signed the SB 1 bill supporting the ‘Million Solar Roofs Plan,’ which is expected to deliver an additional 3 GW of solar power by 2018.

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