Businesses in California began to grapple with the need to reduce their greenhouse gases yesterday following a deal on legislation that would mean mandatory caps on emissions for energy-intensive industries in the state.

The deal has revived hopes of creating a global system for reducing emissions of carbon dioxide and other greenhouse gases, despite the opposition of the US federal government to such a scheme. Several other US states are pondering similar measures, which would mimic the workings of the Kyoto protocol on climate change, which President George W. Bush has rejected.