The legislation next spring will require industries in British Columbia to cap emission as part of the regional carbon trading system being set up by California and several western US states and Canadian provinces.

That regional plan is expected to be unveiled by August 2008.

"I want everyone to know this government supports market mechanisms for reducing greenhouse gas emissions. This government is committed to a cap and trade system," Campbell told municipal officials in Vancouver.

Carbon credit markets are seen as the most business-friendly way to squeeze emission cuts. They allow polluters to pay others to cut greenhouse gas output on their behalf, so they can meet required pollution caps.

British Columbia said in February it would cut the emissions blamed for global warming by 33 percent by 2020. Campbell said goals for emission levels in 2010 and 2016 would be spelled out by the end of the year.

The federal Conservative government said this year it had a plan to cut emissions by 20 percent by 2020, but it has opposed calls for required hard targets on industries' emissions as economically damaging to Canada.

Campbell said British Columbia would use "whatever tools" the federal government gave it, but intended to push ahead with a cap and trade system regardless other whether Ottawa supported or opposed the idea.

Matt Price of Environmental Defense, a coalition of environmental groups, praised Campbell's announcement and said it set the stage or a battle between provinces and the federal government over who would set emission standards.

"The shape of the legislation is going to be critical, but the fact that they are putting (caps) into law is a huge first step," Price said.

EYES NEW PROVINCIALLY OWNED DAM

Campbell outlined several other measures the province planned to meet its emission targets, including a requirement that all travel by government employees be "carbon neutral", starting this year.

The premier also did an about-face on a requirement he pushed through several years ago to have the private sector build all future power plants rather than provincially owned utility BC Hydro.