Electricity retailers must cut greenhouse emissions by 153,000 tonnes a year by 2008 or face legal sanctions including fines.

Legislation that took effect last week also allows for emissions trading, similar to the scheme proposed under the Kyoto protocol, according to an ABC Online report.

"Each retailer will be encouraged to maximise the amount of clean energy and if they exceed their targets they can be allowed to trade the excess with others that might be struggling," acting ACT Chief Minister Ted Quinlan said.

"So it encourages each retailer to maximise the reduction in greenhouse emissions."