With a promise to look more closely at the economic impacts of cutting greenhouse gas emissions, the California Air Resources Board on Thursday unanimously approved a sweeping climate-change strategy.

"This scoping plan puts California on a path to a low-carbon, sustainable, green economy," said air board Chairman Mary Nichols after the vote in Sacramento.

The board's moves are being watched around the country – and to some extent the world – because they're likely to influence federal and international policies in years to come. The plan adopted Thursday creates the nation's first economy-wide trading system for greenhouse-gas emissions.

Under the plan, the state's renewable power generation capacity will roughly triple by 2020, and there will be major increases in the energy efficiency of homes and businesses. Also called for are better vehicle fuel economy, cuts in emissions of refrigerants and other especially potent greenhouse gases, and a reduction in the carbon content of motor fuels.

The governor-appointed Air Resources Board has a long history of environmental leadership, dating back to battles over Los Angeles smog in the 1960s that ultimately fostered nationwide controls on tailpipe emissions, such as the catalytic converter.

But the greenhouse-gas plans are the board's most sweeping actions ever, and will touch virtually every corner of the economy. That worries many business groups.

"This is an economy-changing plan, and it's not going to be cheap, and it's not going to be easy to accomplish," said Shelly Sullivan, executive director of the AB 32 Implementation Group, a business coalition.

The air board's economic analysis estimates the plan adopted Thursday will cost the state's economy $25 billion in the year 2020. But agency staff predict that by then it should also be delivering around $40 billion in annual benefits – mainly through making cars and buildings more energy-efficient.

The nonpartisan state Legislative Analyst's Office and a panel of outside economists, however, found parts of the agency's analysis overly rosy – overstating some benefits and understating the costs of transitioning to a low-carbon economy.

Some business and industry groups, along with a few Republican lawmakers, seized on those critiques and called for the board to redo the economic analysis and delay passage of the plan.

Agency staff and some other economists have defended the ARB's conclusions. But the board offered some concessions Thursday, ordering staff to do more detailed analysis of the plan's effects, with a full economic report to be delivered by the end of 2009.

That change, along with a promise that the plan won't disrupt the state's energy-supply networks, was enough to satisfy Catherine Reheis-Boyd, chief operating officer for the Western States Petroleum Association, whose public comment to the board Thursday was generally positive.

"If there was no acknowledgment of energy or the economy, my testimony would have been very different," she said.

The plan approved Thursday was born more than two years ago with passage of Assembly Bill 32, a state law that committed California to reduce its greenhouse-gas emissions to 1990 levels by 2020.

Thursday's vote approved what is essentially an outline, with many details to be filled in by regulators over the next two years. Most policies will take effect in 2012 or later. The air board has 120 staff members working on the program, spokesman Stanley Young said.

Banging out the details of the emissions market – known as a cap-and-trade system – seems likely to be particularly divisive.

Starting in 2012, the state plans to issue annual permits to firms that emit large volumes of greenhouse gases – power plant operators, oil refineries and so on. The total supply of permits would ratchet down over time, giving companies two options: cut their own emissions or buy permits from other firms that have made deep cuts and thus have permits to sell.

Business groups want the state to give away the emissions credits for free, while environmental groups want them to be auctioned. There's a similar split over the use of carbon "offsets," which would allow industry to meet greenhouse-gas targets by funding carbon-cutting projects outside of California.

A coalition of environmental-justice groups is urging the air board to junk the cap-and-trade system altogether in favor of a carbon tax, and have hinted that they may sue. They argue that emissions trading tends to concentrate pollution in low-income communities, and that a carbon trading system in place for several years in Europe has revealed fatal flaws in the approach.

"In order to make it work, you have to have 100 things line up just perfectly," said Naomi Kim, an attorney with the California Environmental Rights Alliance.

Many other environmental groups, including the Union of Concerned Scientists, Natural Resources Defense Council and Environmental Defense Fund, say that California can learn from Europe's missteps and build a workable system.

Call The Bee's Jim Downing, (916) 321-1065.