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.

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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.

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