The finalization today of EPA’s Clean Power Plan offers Americans a clear, realistic roadmap for addressing planet-warming emissions that threaten the environment and the U.S. economy.

Most importantly, it puts states in the driver’s seat to devise innovative strategies to reduce emissions efficiently and cost-effectively. Now it’s time for states to work together with businesses and cities to craft the approaches that work best for them.

Climate change is a critical challenge, and the impacts will only grow more costly if we fail to act. Last year was the warmest on Earth since we started keeping records over a century ago. During the first half of this year, it got even hotter. Climate change impacts include more extreme heat, which can exacerbate drought and wildfires, more frequent and intense downpours that can lead to destructive floods, and rising sea levels that threaten coastal cities.

Many cities, states, and companies recognize climate risks. And many are taking steps to reduce greenhouse gas emissions.

New federal standards are already reducing heat-trapping emissions from the second-biggest source, transportation, by increasing the fuel economy of cars and trucks. The Clean Power Plan takes the next logical step by addressing the largest source: the electric power sector, responsible for nearly 40 percent of U.S. carbon dioxide emissions.

The plan will accelerate the trajectory toward cleaner power that is already well underway. This spring, for the first time ever, more U.S. electricity came from natural gas than from coal, which emits about twice as much carbon dioxide when combusted. In the first six months of this year, wind and solar made up 65 percent of new utility-scale electric capacity. Leading energy companies have been working to reduce their emissions and some have already pledged to make further cuts.

We’re on the right track. Now we need states to seize this opportunity to build a clean energy future.

The most exciting part of the plan is that it puts state leadership front and center. The plan offers states the flexibility to determine the best way to meet their own targets. Most states will answer the call and do what states do best: innovate.

The most cost-effective way to cut emissions is through market-based approaches, and the Clean Power Plan encourages these innovative strategies.

Ten states, home to a quarter of the U.S. population, already use market-based approaches.

The nine-state Regional Greenhouse Gas Initiative, a cap-and-trade program, has cut emissions from power plants nearly 40 percent since 2005, lowered consumer electric bills by $460 over the past three years, and generated $1.3 billion in economic benefits for member states. California’s cap-and-trade program, launched in 2013, saw companies covered under the cap cut emissions nearly 4 percent in the first year while the state had one of the highest job growth rates in the nation.

To further move more states to consider market-based approaches, the final rule also includes a new incentive program based on early action credits that will boost renewable power and energy efficiency in the near term, helping the U.S. meet its international carbon-cutting pledges, and laying the foundation for deeper emission cuts in the long term. Giving states the time they need to develop their plans– something C2ES and others recommended – will enable states to look at long-term solutions, such as market approaches, renewables and energy efficiency.

The next step is for states, cities, and businesses to come together to craft commonsense plans.