California's cap-and-trade policy gets new lease on life

SACRAMENTO, Calif. (KGO) -- California's nationally recognized Cap and Trade policy has a new lease on life.

It's the system that tries to tackle the challenge of climate change, and state lawmakers narrowly approved an extension.

RELATED: California Democrats urged to reject cap and trade plan

"It's a great day for the planet, for the climate," Governor Jerry Brown said.

Brown applauded lawmakers on both sides of the aisle for what he called their courageous action. By the slimmest of margins they approved an extension of the state's cap and trade system, which the governor believes is the best weapon against climate change.

The program sets a cap for companies, like factories and refineries on greenhouse gas emissions, and requires polluters to purchase permits for every metric ton of carbon dioxide emitted. They pay a penalty if they exceed the limit. If they reduce their emissions, they can sell their credits to companies that pollute more.

San Francisco Assemblyman David Chiu says he had concerns about what he considered giveaways to the oil industry but says this deal still represents progress.

"The version we voted on for the first time adds air quality to a climate program. It increases air pollution penalties that haven't changed since the 1970's, it requires companies that have outdated technology to upgrade equipment," Chiu said.

Many environmental groups wanted more aggressive controls on polluters and criticize this legislation for keeping local air districts out of the loop.

"It undercuts the efforts by other agencies in charge of protecting air quality and public health from doing their work. It's a massive, massive loss," Antonio Diaz said.