Environmentalists are praising a California plan to limit emissions of so-called greenhouse gases, which are widely believed to contribute to global warming. Some business leaders, however, say the proposal will hurt the state's economy. Republican governor Arnold Schwarzenegger reached an agreement on the issue with Democrats Wednesday, the effects could be far-reaching.

The California plan would curb emissions of carbon dioxide and other greenhouse gases by 25 percent by 2020. The state senate has already approved the measure, and the lower house of the state legislature is expected to do the same. Environmentalist Bill Magavern of the Sierra Club praises the legislation as an important step in slowing climate change.

"We like this bill a lot," said Bill Magavern. "We think this is going to be the most important law in the entire country to help reduce emissions of global warming pollution. And since California on its own is the 12th biggest emitter of greenhouses gases in the entire world, that's a very significant step, and we're hoping that other states will follow us."

The bill will establish emission controls on major industries, such as utility plants and oil and gas refineries. The mechanism for achieving the goal was not spelled out, but regulators are encouraged to use a market-based system of emission credits, which can be bought, sold and traded.

Some business leaders, however, are calling the bill a job-killer, and say it will drive up the cost of electricity and encourage industries to leave the state.

Jack Kyser, an economist with the Los Angeles Economic Development Corporation, says business is worried.

"A lot of the details are very, very fuzzy," said Jack Kyser. "The issue is, are there going to be legal challenges? Are there unintended consequences? And I imagine a lot of other states are closely watching how this plays out, because they will probably feel that this will give them another advantage in recruiting business out of the state of California."

Environmentalists say the mandate for lower emissions will help California create new jobs developing and selling cleaner industrial technology.

Arnold Schwarzenegger

In supporting the legislation, Schwarzenegger has angered colleagues in his own party. Republicans say climate change is a national, not a state issue. The bill's supporters respond that the federal government, and President Bush, have not taken action.

Schwarzenegger is up for reelection November 7, and political analyst Sherry Bebitch Jeffe says the agreement will broaden his appeal to moderate and independent voters, and help him with Latino leaders, who support the legislation and who represent a growing constituency.

"It's a win-win-win situation politically for the governor," said Sherry Bebitch Jeffe. "By being so proactive on the environment, he takes away an issue from the Democratic gubernatorial nominee, state treasurer Phil Angelides. He allows himself to reach out to the Latino political leadership. This also allows him to put distance between himself and President George W. Bush."

She notes the Republican president is unpopular in the state, where Democrats dominate, and where most voters are concerned about environmental issues.