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UPDATE 1-California governor signs climate policy extension into law

(Adds comment from governor)

LOS ANGELES, July 25 (Reuters) - California Governor Jerry Brown signed into law on Tuesday a package of bills intended to use market forces to cut greenhouse gas emissions, extending by a decade the state's signature plan to combat climate change.

The legislation puts California at the forefront of plans by mostly Democratic governors to reduce carbon emissions and adhere to the goals of the Paris climate change accord after Republican President Donald Trump withdrew the United States from the pact.

"California is leading the world in dealing with a principal existential threat that humanity faces," Brown said at a signing ceremony in San Francisco.

"We are a nation-state in a globalizing world and were having an impact and youre here witnessing one of the key milestones in turning around this carbonized world into a decarbonized, sustainable future," he said.

Both houses of California's Democratic-controlled legislature passed the bills on July 17. Opponents had said they represented a "regressive" tax that would not affect climate change.

California's cap-and-trade program sets a state limit on emissions of greenhouse gases and lets companies, such as factories and refineries, buy and sell permits to emit carbon dioxide. The system uses market forces to find the most efficient ways to cut pollution, supporters say.

The legislation extends the program, which was set to expire in three years, through 2030. But it also seeks to strengthen the program by cutting the number of free carbon allowances and requiring that offsets be sourced from California, not elsewhere.

Large industrial facilities will also be required to upgrade old equipment with cleaner, more modern technology by 2023.

Despite holding a supermajority, Democrats failed in previous attempts to pass new cap-and-trade legislation over opposition from more liberal members of the party who felt it did not go far enough and moderates concerned about the impact on business.

Republicans were largely united in opposing the legislation, saying it placed unfair burdens on consumers and employers, especially on top of a 12-cents-a-gallon gasoline tax hike passed by state lawmakers earlier this year. (Reporting by Dan Whitcomb; Editing by Ben Klayman and Tom Brown)