http://www.reuters.com/article/2011/04/17/carbon-california-idUSN1719801220110417

California Governor Jerry Brown could still make changes to the state's ambitious plan for a greenhouse gases market, the state's climate change regulator said, even as she battles a lawsuit that could delay the program's start next year.

The lawsuit, as well as complex technical issues and the distraction of a political fight over the state budget, are all obstacles for the most populous state to get its greenhouse gases market off the ground.
California is the last hope of U.S. environmentalists to revive a national climate change agenda. The state plans to set a limit on emissions and let factories and power plants trade rights to pollute. The hope is that the most efficient will profit from their knowledge and new industries will emerge.
If it succeeds, the plan known as cap-and-trade could spread to other states. Similar legislation failed in the U.S. Congress and many hope national leaders would reconsider if California does well.
A lawsuit by poor communities who fear cap-and-trade could worsen air quality in their part of the state is forcing regulators to consider other options. "We have to be open to the possibility that there could be other approaches," the state's top climate regulator, Air Resources Board Chair Mary Nichols, said at a conference late last week.
"And certainly the current governor deserves a chance, like the last one did, to put his mark on the program."
Previous Governor Arnold Schwarzenegger, for instance, instructed that a substantial number of pollution permits be given away instead of sold by the state.
Nichols plans to brief Governor Jerry Brown before a July board meeting to consider key details of the program.
The state lost the first round of the lawsuit but Nichols expects to win on appeal and said that Brown had not indicated "in the slightest" that he wanted to change cap-and-trade.
Still, "he hasn't had a chance to yet, because of the budget, to get fully briefed on the program, or to indicate, you know, whether he would like to see changes," she said at the Navigating the American Carbon World conference in Los Angeles, which was sponsored in part by Point Carbon. Thomson Reuters owns Point Carbon as well as Reuters News.
Brown's support of the state's broad climate change law was a hallmark of his campaign last year to be governor again, nearly three decades after a first two terms. But he focused on creating green jobs and did not dwell on the cap-and-trade greenhouse gas market, a contentious part of California's plan to cut emissions to 1990 levels by 2020.
"Where he stands is a big mystery," said Brent Newell, one of the lawyers for the Association of Irritated Residents suing the state over cap-and-trade. Brown has been an advocate of the poor, but he reappointed Nichols, a longtime colleague who is a driving force of cap-and-trade, Newell acknowledged.