Gov. Arnold Schwarzenegger and legislative leaders agreed Wednesday on a plan to cut by 25% the amount of greenhouse gases emitted from California electric power plants, refineries and other sources by the year 2020.
It would make California the first state in the nation to fight global warming by slapping caps on carbon dioxide and other emissions.
The deal was also seen as a rebuke to the Bush administration, which favors voluntary efforts to reduce greenhouse gases.
"By combining market-based mechanisms and enforceable emissions reductions, this bill strikes the right balance between improving the environment and protecting the economy," said a statement from Pacific Gas & Electric Co., the state's largest investor-owned electric utility, which is based in San Francisco.