Spurred by the Gulf of Mexico oil spill, California legislators are working towards adopting the nation's toughest renewable energy law to reduce the state's dependence on oil and serve as a model for other states.

The law would require privately and publicly owned electric utilities to generate a third of their power from wind, solar and other clean sources by 2020, according to the Los Angeles Times on Thursday.

With images of gushing crude and oil-covered birds dominating TV screens, environmentalists, utilities generators, labor unions and other industry groups now are meeting at least weekly and are closing in on a deal, Governor Arnold Schwarzenegger's chief of staff, Susan P. Kennedy, was quoted as saying.

The effort is supported by Schwarzenegger, who is eager to burnish his environmental legacy before leaving office in January even though he vetoed a similar bill last fall, according to the paper.

After last fall's veto, Schwarzenegger issued an executive order unilaterally imposing the 33-percent renewable standard. But Democrats denounced the action as mainly symbolic because it does not bind future governors.

This year, Democrats came back with a compromise bill, which has its first legislative hearing Thursday in the Assembly Utilities and Commerce Committee.

"I'm very optimistic," Kennedy said. "There's always been a consensus around the goal. It's simply a matter of identifying what the obstacles are in the implementation."

The biggest disagreement centered on the use of credits that energy producers around the West can earn for generating renewable power, the paper said.

Currently, the credits can be traded among electricity generators and purchasers and used by California electric utilities to satisfy part of their renewable energy obligations.

Environmentalists, construction and utility worker unions and consumer advocates want to restrict the use of credits, arguing that wind and solar power produced in Montana or Utah brings limited benefits to California in the form of cleaner air or new jobs.

The utilities counter that California needs to be part of a regional energy market if it wants to ensure adequate supplies of competitively priced electricity.

Now, under a compromise that is forming, the bulk of new renewable power plants would be built in California, creating thousands of high-paying green construction and operations jobs, according to the paper.

At the same time, the emerging deal would leave utilities with enough flexibility to buy electricity from power generators throughout the West.

The compromise, Kennedy said, should guarantee that at least half the renewable energy under the 33-percent goal would be generated at California power plants.

Still to be determined is the exact percentage that could come from tradable credits linked to power from renewable sources based outside the state, according to the paper.