Legislators also approved a bill Monday meant to reduce other air pollutants, including those thought to cause or exacerbate asthma.
The pioneering cap-and-trade plan sets a limit on emissions of greenhouse gases and allows companies, such as factories and refineries, to buy and sell permits to emit carbon dioxide. The California governor had directly urged lawmakers to approve the extension for days prior to the vote.
Cap and trade has always been debated among environmentalists.
However, the vote to extend the cap-and-trade programme beyond 2020 was opposed by some conservatives who said the measure would hit the poor by increasing prices for fuel and food.
Republican lawmakers were also highly critical of the proposal and accused Democrats of rushing it through the legislative process.
"We could shut down the entire state of California and it would have no effect on the global climate", Mr Vidak said. The nonpartisan legislative analyst said past year that the existing cap and trade program accounted for an 11-cent-per-gallon increase in gasoline prices.
"This bill is a Christmas tree, with ornaments bought and paid for by special interests", said state Sen.
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State Sen. Tom Berryhill, R-Modesto, defended his Yes vote, saying he refuses to sit on the "sideline". "That's why we're all here, Democrats and Republicans because we have a path forward", said Brown in a news conference following the assembly vote.
"Again, this bill is not ideal, but it is more reasonable after bipartisan negotiation", Berryhill said after casting the lone Republican vote.
The legislation extends California's cap-and-trade program, which was set to expire in three years, through 2030 and attempts to strengthen it by requiring large industrial facilities to upgrade old equipment with cleaner, more modern technology by 2023. "I am very pleased to have given farmers, small business owners and rural Californians a voice in the negotiation of a measure that would have been passed one way or another".
In addition, one Democratic member of the Assembly was absent this week, putting pressure on Democrats to recruit some Republican support.
In gaining two-thirds approval, the state protected itself from lawsuits that the current cap-and-trade program has faced from groups including the California Chamber of Commerce.
Senate president pro tem Kevin de Leon displays a list of various backers of a climate change bill Monday.
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