Schwarzenegger signs California greenhouse gas cap legislation

San Francisco (Platts)--27Sep2006

California Governor Arnold Schwarzenegger on Wednesday signed landmark
legislation that makes California the first US state to cap greenhouse gas
emissions from industrial sources and allows regulators to create an allowance
trading program.

The greenhouse cap law, AB 32, will require the state's major industries
to reduce their GHG emissions by 25% by 2020, codifying GHG reduction targets
set by Schwarzenegger in 2005.

Electricity generation is the third largest emitter of GHG in California,
producing about 20% of total emissions, according to the California Energy
Commission's 2005 Integrated Energy Policy Report. California is the
12th-largest emitter of GHG in the world.

A body known as the California Air Resources Board will be responsible
for developing and putting in place a range of rules and regulations prior to
the start of enforcement of the GHG cap in 2012.

The board's work will include developing a baseline to measure emissions
by 2008. By the start of 2009, the board will need to approve a scoping plan
for achieving the "maximum technologically feasible and cost-effective
reductions," from sources of GHG by 2020.

The board will have the authority to adopt regulations on the use of
market-based mechanisms to achieve GHG reductions. The board will also need to
adopt regulations governing voluntary emissions reductions.

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