"Canada needs to do a U-turn," Environment Minister John Baird said. "We are serving notice that beginning today industry will need to make real reductions."

But he maintained that the Kyoto targets, agreed by a previous Liberal government in 1998, are unattainable, while environmentalists and opposition parties panned his new plan as doing too little too late.

Canada had agreed under the international Kyoto Protocol to reduce carbon dioxide (CO2) emissions to 6.0 percent below 1990 levels by 2012, but emissions have instead increased by 35 percent.

The government's new plan aims to cut greenhouse gas emissions linked to global warming by 150 megatonnes, or 20 percent based on 2006 levels, by 2020. Growth in emissions would first be halted by 2012 and eventually would be reduced by up to 70 percent by 2050.

"This is the toughest (environmental) plan ever proposed by a Canadian government," Baird told reporters.

But Liberal environment critic David McGuinty countered in a statement: "All we get is a pile of excuses about why they can't do anything to reduce greenhouse gases for decades."

"The national target is wholly inadequate. It falls short of Canada's legal commitment and falls short of what is needed for the environment," activist Matthew Bramley of the Pembina Institute told AFP.

Companies that produce electricity by combustion, Canada's booming oil and gas sector, base metal smelters, iron and steel companies, and mining firms, as well as cement, pulp and paper, aluminum and chemicals producers face mandatory emissions cuts.

They currently account for 52 percent of Canada's carbon emissions.

Heavy industry would be required to cut CO2 emissions per unit by 18 percent by 2010, or an average of six percent per year starting immediately.

Thereafter, they would be expected to cut emissions by two percent annually to reach a 26 percent reduction by 2015.

Under the scheme, companies could contribute to a government clean technology fund, or trade emissions credits on a domestic market to be set up by the government, with possible future linkages with trading systems in the United States and Mexico.

They may also fetch credits under the Kyoto Protocol's clean development mechanism to encourage projects in developing countries, to reduce their emissions tally by up to 10 percent.

Companies which reduce their CO2 emissions linked to global warming prior to 2006 would also be rewarded with a one-time credit for early action, while new factories would get a three-year exemption.

The minority government has clashed with Parliament over its refusal to try to meet its Kyoto Protocol targets and has been threatened with lawsuits to force emission cuts.

Last week, Baird outlined a doomsday economic scenario if Ottawa imposed tougher measures to cut greenhouse gas emissions to meet its international commitment.

He told a senate committee reviewing a private member's bill that forces the government to meet its Kyoto timetable that these emissions cuts would have "a devastating effect on the Canadian economy," with hundreds of thousands of job losses and skyrocketing unemployment.

Canada's economy would decline by more than 6.5 percent relative to current projections in 2008, falling about 4.2 percent or about 51 billion Canadian dollars (45 billion US) below the 2007 level, he predicted.

Under the current plan, gross domestic product would be slashed by only 0.5 percent, costing the economy less than 8.0 billion Canadian dollars (7.1 billion US) annually, Baird said Thursday.

Previously, Ottawa also announced rebates for more fuel-efficient cars, rolled out new vehicle fuel-efficiency regulations that echo US rules, and banned energy inefficient light bulbs.

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