Washington, Canada (GLOBE-Net) – Two vocal supporters of carbon trading and climate change solutions are coming together to create a joint market for greenhouse gases. California Governor Arnold Schwarzenegger and British Prime Minister Tony Blair plan to develop an international system for purchasing and selling carbon dioxide emissions.

The two leaders met this week in California as part of Blair’s visit to the state. They discussed matters of climate change during a roundtable session held by Steve Howard, CEO of The Climate Group, and John Browne, chairman of BP. The leaders propose a system that would set a cap on total carbon emissions and allow businesses in California and the UK to buy, sell or trade credits to allow them to emit a certain amount of carbon dioxides.

Such a scheme is already in place in the European Union, and has created a multibillion dollar carbon market, although it has suffered some instability in the first stage. The second stage is set to begin, as countries are now submitting their revised targets for the second period through 2012.

Although the United States has declined to participate in the Kyoto Protocol and currently rejects a cap-and-trade system, many states have indicated a willingness to act without federal approval. A group of seven Northeastern states recently created a regional carbon trading system of their own.

Blair and Schwarzenegger also discussed opportunities to encourage business to develop energy alternatives. BP Chairman John Browne has highlighted his company’s efforts to develop renewable energy sources as well as environmentally-friendly fossil fuels.

Government policy is important to energy development, he said in a speech this year at the Massachusetts Institute of Technology.

“They can price externalities such as carbon in ways which encourage the development of innovation and alternatives,” he said, adding that “the element of society which responds to incentives is business.”

Carbon trading is a way of providing financial incentives to businesses to develop cleaner energy or utilized existing energy more efficiently, the leaders agreed.

Transportation is a major target of the plan, as 41 percent of emissions in California and 28 percent of those in the United Kingdom come from trucks or cars.

Schwarzenegger has set a target of cutting California’s emissions to 2000 levels by 2010, while Blair envisions a long-term cut to 60 percent of 1990 levels by 2050 in order to stabilize the earth’s atmosphere.