SAN FRANCISCO (Reuters) – As US prospects for a national climate change bill fade, five US states and Canadian provinces are on track to start a cap-and-trade market for carbon dioxide in 2012, say officials who see fading federal momentum boosting regional efforts.

California, the keystone market with the eighth-largest economy in the world, New Mexico, and the Canadian provinces of Ontario, British Columbia and Quebec all plan to join the system meant to combat climate change and boost economies by creating green jobs such as for workers who build alternative energy equipment.

There is already a working US cap-and-trade system in the Northeast, although the five Western partners’ market would be roughly four times bigger when fully implemented.

Cap-and-trade systems put limits on pollution — in this case, gases that suck up heat and warm the planet — which are decreased year by year. Polluters must acquire emissions credits, which can be bought and sold. If a factory can make changes to cut pollution for less than the price of a credit, it is likely to do so, then sell unneeded credits at a profit.

Many members would prefer strong national systems, but at the moment they are not getting them.

“If things continue to stall in Washington DC, then I think there’s some renewed energy around getting the authority to do this at the state level,” said California Environmental Protection Agency’s Michael Gibbs.

The 11-member Western Climate Initiative had planned a bigger effort to cover most Western US states and four of the 10 Canadian provinces, but Arizona says it won’t join cap-and-trade, and states like Washington and Montana have failed to get necessary legislative approval so far.

The contention that green policies like cap-and-trade are good for jobs is still a source of debate. Many businesses concerned with costs are mounting an effort to reverse the plan, and Republican candidates for California governor agree.