But Republican Gov. Arnold Schwarzenegger, who gets high marks from environmentalists, backed the bill on Wednesday, saying it "strengthens our economy, cleans our environment."

He and other bill supporters believe business can make more money by switching to energy-efficient systems and developing clean technologies. New jobs will sprout from a burgeoning service industry to cater to companies' green demands.

They look at behemoths like General Electric Co., which unabashedly admits to investing in environmentally friendly operations because it sees lots of green, as in cash.

Schwarzenegger has been at odds over climate change with President George W. Bush, who pulled the United States out of the 160-nation Kyoto Protocol in 2001 because he maintained its mandatory caps would be harmful for the economy. He also balked that developing countries like China were wrongly excluded.

In July, the governor upstaged Bush by signing an accord with British Prime Minister Tony Blair for joint research on climate action.

The bill to be signed by Schwarzenegger states that, by taking a global leadership role, California can position its economy, technology centers, banking and businesses "to benefit from national and international efforts."

JOBS AND MONEY

"This is confirmation of a state that knows an economic opportunity when it sees it," said Fred Krupp, president of advocacy group Environmental Defense.

California, the world's eighth largest economy and 12th largest producer of greenhouse gases, aims to reduce its emissions to 1990 levels by 2020, a cut of 25 percent.

Two weeks ago, the University of California, Berkeley, published a study that California's global warming action will add US$60 billion to the US$1.5 trillion economy and 17,000 jobs annually.

But if the state also offers innovation incentives to business, the boost to the economy will be US$74 billion and 89,000 new jobs annually, the study said.

State officials note that California has already proved itself a world leader on reducing carbon dioxide and other heat-trapping gases with its benchmark law to reduce auto emissions and renewable energy policies.

They see a gold mine of opportunity in developing giants China and India rather than a threat to their economy.

"We will be talking to China because they are asking for our help ... on public participation and regulation to deal with pollution," California Environmental Secretary Linda Adams told Reuters.