Last month, after years of debate and delay, California finally launched AB32, the official name of the state’s carbon cap-and-trade system. The result of the Global Warming Solutions Act, which was signed into law by then-Governor Arnold Schwarzenegger in 2006, AB32 commits California to reduce its greenhouse gas emissions to 1990 levels by 2020. That’s about a 17% cut from where the state’s emissions would likely be if no legislative action had been taken. The reduction is set to be achieved by putting a cap on the state’s carbon emissions that is gradually tightened by about 2 to 3% a year. Companies covered under the law need to either reduce their carbon emissions to meet the tightening cap or purchase carbon allowances on a regulated market to compensate for their emissions.