As of January 1, 2013, the cap-and-trade portion of California's Global Warming Solutions Act, AB 32, went into effect. Over 300 major polluters in California will face emissions reductions obligations, and in 2015, the program’s size will double to include transportation fuels and natural gas. These companies were given an allowance as to how much carbon pollution they can dump into the atmosphere. They can buy additional "allowances" from the state which held its first sale November 2012. There are more auctions scheduled.
Eventually companies will be able to trade allowances among themselves. So a company that emits less CO2 than they are allowed to can sell the remaining portion of its allowance to a company that exceeds its allowance. As years go by, the allowances will be reduced thus reaching California's goal to cut its greenhouse gas (GHG) emissions back to 1990 levels by 2020.
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