The 2006 California Plan was proposed by the Speaker of the California State Assembly, Fabian Nunez, and later signed into law by Governor Arnold Schwarzenegger. The Bill itself does not outline specifics, but delegates the creation of an action plan to the State Air Resources Board. The Board’s scoping plan was approved in 2008 and is considered an amendment to the 2006 California Plan.

The Plan authorizes the State Air Resources Board to determine the level of emissions in 1990 and set the target amount of emissions for 2020 to that level. The Climate Action Team, under the Governor’s auspices, is also authorized to coordinate climate change policy. The Plan does not set forth clear measures to reach the target emissions reduction. Instead, it authorizes the State Air Resources Board to decide the appropriate and necessary measures to lower emissions. The Act sets specific guidelines for the Board’s measures. The measures cannot disproportionately hurt low-income individuals and families; they must be cost-effective and account for broader ecological and public health concerns. The Act specifically allows for a cap-and-trade system to be implemented in California whereby California auctions off credits that authorize firms to emit carbon up to a limit determined by the state. The credits to emit carbon can be traded between firms.

The Scoping Plan, developed and approved by the State Air Resources Board pursuant to the 2006 Act, proposes increased renewable energy development; a regional cap-and-trade program; energy efficiency targets for construction and transportation; and specific fees to incentivize eco-friendly living. 

The Plan proposes a California cap-and-trade system that places a cap on 85% of California greenhouse gas emissions at no more than the preferred 2020 levels. The plan will allocate credits that authorize those acting within the cap-and-trade system to emit a certain amount of carbon. Businesses and other actors can trade carbon credits for the right to emit more than the authorized amount or capitalize off of conservation. The Plan also proposes linking California’s system with a cap-and-trade system yet to be developed by the Western Climate Initiative.

The Plan will institute small fees for trading carbon credits, emitting high global warming potential gases and water use. The revenues from these fees will be used to fund the aforementioned measures and other local projects that require state funding.