Under the scheme, which was passed by California’s Air Resources Board (ARB), companies will be able to buy and sell permits licensed by the state.

The authorities hope other states will follow their example. The carbon trading market will be in place by 2012.

The regulation is a key measure in California’s pledge to cut greenhouse emissions laid out in the climate change law introduced by Governor Arnold Schwarzenegger in 2006.

Some companies have expressed concern at the extra costs they will incur at a time of recession but the belief is that the new law will encourage new jobs in clean technology fields.

ARB chairman Mary D Nichols said: “This programme is the capstone of our climate policy and will accelerate California’s progress toward a clean energy economy.

“It rewards efficiency and provides companies with the greatest flexibility to find innovative solutions that drive green jobs, clean our environment, increase our energy security and ensure that California stands ready to compete in the booming global market for clean and renewable energy.”

The regulation will cover 360 businesses representing 600 facilities.

It will be divided into two broad phases: an initial phase beginning in 2012 that includes all major industrial sources and utilities; and a second phase that starts in 2015 and brings in distributors of transportation fuels, natural gas and other fuels.

Alison Brown

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie