California’s starting a state cap-and-trade system to help address global warming later this year. A new report from the state’s Legislative Analyst’s Office finds that the program could be raising up to $14 billion.

The money will be raised from CO2 pollution credits. Auctioning begins this fall and it’s expected that $1 billion to $3 billion will be raised in 2012 and 2013 as the program gets rolling.

Currently, the California state budget deficit is at $9 billion. However, even if the surplus from the cap-and-trade program is greater than the deficit, that doesn’t ensure that it will cut the deficit to zero, since the money raised from the program must be used for projects that are themselves related to cutting greenhouse gas emissions. Still, Governor Jerry Brown’s budget for the coming fiscal year includes $1 billion in revenue from the program, and a considerable amount of money from the program could go towards California’s ambitious high-speed rail plans.

California, under the Global Warming Solutions Act of 2006, has committed to cutting its greenhouse gas emissions 80% by 2050 (below 1990 levels).

Cap-and-trade, originally dreamt up by business interests and used legislatively by the George H.W. Bush administration starting in 1990 to stop acid rain, has been used by Europe and the Northeastern U.S. for years to cut global warming pollution. Programs have also now been implemented or approved in Australia, China, New Zealand, and other places.

The Northeastern U.S. cap-and-trade program under the Regional Greenhouse Gas Initiative (RGGI) has been hugely successful, as we’ve written many times here on CleanTechnica. In fact, the biggest problem related to the program has actually been the use of RGGI funds for general state purposes (such as reducing state deficits) rather for the clean energy and energy efficiency programs the money is supposed to go to. Hopefully, that doesn’t become an issue in California. Overall, though, RGGI has shown us that cap-and-trade cuts CO2 emissions, saves citizens money through improved energy efficiency, and creates jobs. California has a lot to look forward to!