California Governor Arnold Schwarzenegger on Wednesday announced a deal with the state's legislators on a bill to make California the first U.S. state to slap strict limits on the emission of greenhouse gases.

"I am happy to announce we have reached a historic agreement on legislation to combat global warming," said Schwarzenegger, who has made combating global warming the centerpiece of his reelection campaign.

"We can now move forward with developing a market-based system that makes California a world leader in the effort to reduce carbon emissions," he noted. "Reducing greenhouse gas emissions is an issue we must show leadership on."

The bill, AB 32, passed in the state Senate Wednesday evening after tense negotiations between the Republican governor and the Democrats in the legislature, will go to the state Assembly later this week.

The bill will authorize the California Air Resources Board to begin the process of measuring the amount of carbon dioxide and other greenhouse gases coming from industries.

Once a tally is taken, regulators would set limits for each facility and industry that would take effect beginning in 2012.

Regulators will be able to enforce limits with financial penalties as well as provide market-based incentives to industry.

The bill will also create a new market that would allow industries whose emissions are below limits to sell credits to other companies that exceed their caps.

"The success of our system will be an example for other states and nations to follow as the fight against climate change continues," Schwarzenegger said in a statement released by his office.

"AB 32 strengthens our economy, cleans our environment and once again, establishes California as the leader in environmental protection."

California, the 12th largest carbon emitter in the world, if counted as an independent economy, will be followed by other U.S. states in fighting global warming, predicted the state's legislators.

"We're the first to step up to the plate in a real way," said Assembly Speaker Fabian Nunez, the co-author of the bill.

Environmentalists praised the agreement with the governor for providing California with the tools for cutting greenhouse gas emissions. But business groups expressed their concern that the requirement to create a system of market-based pollution credit trading was not strong enough.

U.S. President George W. Bush pulled the United States out of the Kyoto Protocol to cut greenhouse gas emissions in 2001, and refused to take practical steps to fight global warming at federal level.

However, fellow Republican Schwarzenegger, always a sharp critic of Bush on environmental issues, bypassed the President and spoke with British Prime Minister Tony Blair about further cooperation last month.

Source: Xinhua