The California Air Resources Board released a draft version of its cap-and-trade regulation Tuesday, a program that would establish a cap covering about 85 percent of the state's greenhouse gas emissions and allow trading to ensure cost-effective emissions reductions.
The program, which would be the first cap-and-trade program in the country, would take effect Jan. 1, 2012.

According to California state law, greenhouse gas emissions must be reduced to 1990 levels by 2020.

Under the proposal, the first compliance period would cover electricity generation and large industrial sources, which would be required to start cutting emissions starting in 2012. Meanwhile, industrial fuel combustion, commercial and residential fuel combustion of natural gas and propane and transportation fuels would have to comply starting in 2015.

"As world leaders prepare for another conference at which no new international treaty will be signed, it is important that the public understand that progress in reducing emissions continues," said Mary Nichols, ARB chairman. "By releasing the first draftof a cap-and-trade system that California will put into effect in 2012, we are demonstrating the state's determination to push ahead, continue to work with other states in the U.S. and abroad, and invite others to join us."

According to Reuters, CARB is still deciding whether to include home fuel and transportation in the first cap-and-trade compliance phase. The news service says the legislation would likely include clean vehicle regulations.

"I look forward to a program in California that achieves our environmental goals and boosts our economy and I applaud the California Air Resources Board for laying the groundwork in developing a program with flexibility to achieve emission reductions at lower costs," said Governor Arnold Schwarzenegger.

To read the entire draft, click here.