California’s ambitious new effort to reduce greenhouse gas emissions with a pollution trading system could help determine how popular these arrangements become in the future, according to Global Insight.

In a research note, the economic research firm indicates that the California Senate has passed a new bill that, “calls for a 25% reduction in the greenhouse gas emissions generated by the state’s energy industries and other large source emitters by 2020 under an unprecedented cap-and-trade system.” This has been estimated to represent 147 million tons of carbon dioxide that would have otherwise been produced between now and 2020, it reports.

“Perhaps most importantly, California’s new framework puts a cap on GHG emissions — a first for the United States, and a position that breaks with the federal government’s established approach of voluntary measures and flexible targets based on energy intensity. Moreover, the strong endorsement of a cap-and-trade system for carbon dioxide, methane, and nitrous oxide also breaks new ground, not least because of the scale on which it will operate in California,” Global Insight says.

A cap-and-trade system is already in operation in Europe, and a voluntary trading system has been developed in the U.S. Earlier this year, the Montreal Exchange announced the planned creation of the Montreal Climate Exchange to trade environmental products in Canada, too.

“If the efficacy of the cap-and-trade system is convincing there, it will likely inform more thoroughgoing regulatory initiatives elsewhere,” Global Insight predicts. “California’s actions have already put the merits of the federal government’s approach to the test. More states signing up to intervene more aggressively in their energy markets for the socially desirable outcomes linked to reduced GHG emissions could well prompt a shift at the national level of the sort upon which a more effective global response to global climate change might be built.”