Canada's federal government has signed an agreement with California to further reduce vehicle emissions.

Environment Minister Catherine McKenna announced Wednesday that the two governments will work together on regulations to cut greenhouse gases from vehicles and promote the use of cleaner-running vehicles.

McKenna announced the agreement with California Gov. Gavin Newsom, and signed the memo of understanding with the chair of the California Air Resources Board, Mary Nichols.

California has pioneered low-carbon fuel standards in the United States, and Canada is aiming to cut emissions by 30 million tonnes by 2030, the equivalent to taking seven million cars off the road.

"As the world's fifth-largest economy and a global leader in clean transportation, California is a leading example of how climate action can be good for people, the environment and the economy," said McKenna in a statement.

"We look forward to working with California to fight climate change, keep the air clean and give drivers better options for cleaner, more affordable vehicles."

Under current regulations, by 2025 new model light-duty vehicles are expected to burn as much as 50 per cent less fuel and emit half the volume of greenhouse gasses compared with vehicles built in 2008.

During a teleconference with media Wednesday, McKenna said the agreement with California will do three main things:

Canada and California will collaborate on regulations to reduce emissions. "We're moving quickly to electric vehicles but need to clean up the vehicles that the majority of people are still driving," she said.

Canada will accelerate the transition to zero-emission vehicles, in part through incentives that make them more affordable.

The two governments will work together on clean-fuel alternatives.

California is suing the U.S. federal government after President Donald Trump moved last summer to no longer allow California to set its own standards for tailpipe emissions.

McKenna says in the past Canada harmonized its vehicle emission manufacturing standards with the U.S. Now 'it looks like there will be two standards in the U.S.' (Rick Bowmer/The Associated Press)

Trump is enacting that change at the same time as he is rolling back standards set under his predecessor Barack Obama that would have required the efficiency of gasoline-powered vehicles to improve each year through 2025.

Canada has aligned with the United States on tailpipe emissions standards for more than two decades and signed on to the 2012 version set by Obama.

After Trump moved to lower those standards last summer, Canada said it was reviewing its plan and wouldn't commit to maintaining parity with the U.S. any longer.

McKenna said that in the past, Canada harmonized its vehicle emission manufacturing standards with the U.S., but now "it looks like there will be two standards in the U.S."

She said "that's not anybody's first choice," but the two countries couldn't meet their emissions targets without aggressive action on vehicle pollution.

'Essential' to growth

During the teleconference with McKenna, Newsom said the reduction of greenhouse gases is "essential to our economic growth and prosperity." He said the state has out-performed the rest of the U.S. in GDP growth for the past five years.

"For us, these vehicle emissions standards are fundamental and critical to reaching our goals."

Asked what he had to say to conservative politicians who oppose firm action on climate change, Newsom issued an invitation.

"If you want to see if climate change is real, come to California. See what we've just come through in the past few years," he said, citing wildfires that claimed dozens of lives and caused record property damage.

"Something big is happening. Mother Nature has joined the conversation."

The announcement was met with apprehension from the auto industry, who voiced concern about the implications of manufacturing vehicles to two different emissions standards.

A car hauler transports Dodge Ram pick-up trucks to a holding lot in Detroit, Mich., last year. Auto industry leaders expressed concern about the agreement with California. (Rebecca Cook/Reuters)

Mark Nantais, president of the Canadian Vehicle Manufacturers' Association, said that if Canada were to formally part ways with the U.S. on vehicle standards, it would create "all kinds of inefficiencies in a market that's a highly integrated market to begin with."

"Over two years now, we've worked very hard to strike an agreement on a North American free trade agreement that supports the integrated economies," he said.

"Canada, in our view, needs to ensure that national standards … for light-duty vehicles remain aligned with the United States, which enable us to deliver vehicles to Canadian consumers ... with continued environmental improvements, but at an affordable cost."

Similarly, the Canadian Automobile Dealers Association said the announcement "runs counter to the benefits of single national standard with the United States."

"Moves away from a harmonized approach will hinder choice and increase costs for Canadian consumers," said spokesperson Huw Williams.