In what the L.A. Times calls "landmark" legislation, on Thursday California became the first state in the nation to adopt a classic cap-and-trade system for regulating greenhouse-gas emissions.
Cap-and-trade is the centerpiece of AB 32, California's historic climate change law that mandates a reduction in carbon pollution to 1990 levels by 2020. Beginning in 2013 the state's largest carbon emitters will be required to meet the caps or buy credits if they cannot.
It's early days, but the carbon trading market set up by California could be huge: by 2016, it would represent $10 billion in traded carbon offsets, making it the biggest carbon market in the world after the European Union.
That's $10 billion that could go toward everything from forest preservation to air-capture of atmospheric carbon. And 100 percent of those offsets must be in the U.S., making it a truly domestic initiative.