Schwarzenegger signs California's landmark emissions law

New York, 28 September: California's Global Warming Solutions Act, which requires the state to reduce its emissions of greenhouse gases (GHGs) to 1990 levels by 2020, was signed into law on Wednesday by governor Arnold Schwarzenegger.

The landmark legislation means the state will have to cut its emissions by the equivalent of around 174 million tonnes of carbon dioxide, or 25% of projected business-as-usual emissions for 2020.

California's legislature passed the bill on 31 August and the governor's endorsement had been widely expected. Some industry sources expect it to lead to a regional climate effort including emissions trading, possibly bringing in other states such as Oregon and Washington (see Carbon Finance, September 2006, page 1).

The Act authorises the California Air Resources Board – part of the state Environmental Protection Agency – to implement "market-based compliance mechanisms". These could include "greenhouse gas emissions exchanges, banking, credits and other transactions", as long as those approaches achieve the same GHG reductions as direct compliance.

The GHG restrictions will take effect at the start of 2012, applying to utilities, refineries and industrial facilities. Utilities and industrial firms will be able to take "early action measures" before 2010, and receive credit for these improvements when the GHG rules take effect in 2012. The Air Resources Board will rule on what measures are acceptable in 2007.