The regulations are designed to reduce California's greenhouse gas emissions and produce less climate change-causing pollution.
California's cap-and-trade system is the nation's first at the state level and will created a market for greenhouse gasses by allowing some of the state's dirtiest industries to trade carbon credits.
For years that has been fierce opposition to the market-base regulations by the polluting industries cap-and-trade would target.
The oil-industry, a major operator in California, went as far as sponsoring a ballot initiative to stop cap and trade by financially backing proposition 23 in 2010.
There were also numerous legal challenges that had to be sorted out before the Air Resources Board could approve the new rules.
After hearing a final round of criticism and critique from industry groups and unions, who are worried that the regulations will make the cost of business too high and result in jobs moving out of California, the Chairperson of the Air Resources Board said, "Cap-and-trade is a new tool that for the first time allows us to reward companies for doing the right thing.
" The latest in California cap-and-trade is part of AB-32, which is comprehensive climate change legislation passed in 2006.
The goal of AB 32 is to lower levels of greenhouse gas emissions, particularly carbon dioxide, to 1990 levels by 2020.
In 2013, the largest emitters will be required to meet the caps set by the recent regulations or buy additional credits.
By 2015 the cap and trade regulations will be extended to include almost 85% of the state's carbon dioxide emitter.
The California Air Resources Board will be the administrators of the new carbon market, which by 2016 is expected to oversee $10 billion in carbon allowances.
If that projection is correct then California's state carbon market will be one of the largest in the world.
While some projections and estimates show that some industries and jobs might leave California in the short-term, and move to states with less stringent environmental regulations, the growth of long-term green jobs might offset these losses.
The green jobs sector is likely to see an increased demand because if businesses and companies can save carbon credits, or increase their carbon storage capacity, then they can sell those carbon units as tradable equities.
California's carbon market is also likely to create domestic jobs because none of the credits can be purchased outside of the U.
Other states are watching intently to see what happens with California's cap-and-trade regulations.
So too is the federal government, which recently rejected a similar program that would have set carbon emissions standards at the national level.