Canada will be releasing a new set of carbon emission rules specifically targeting model-year 2017 vehicles as it works to align its environmental regulations with that of the United States.

Canada said on Monday the new rules meant to reduce the country's fuel consumption by 50 per cent by 2025.

Environment Canada said the proposed rules would apply to vehicles in the model-year 2017 to 2025 period. The goal is to reduce greenhouse-gas emissions by 174 megatonnes, equivalent to one year's worth of carbon output from the entire transport sector.

Moreover, Tier 3 vehicle and fuel standards will reduce smog-forming air pollutant emissions for new vehicles by up to 80 per cent compared to the current Tier 2 standards.

The Canadian Vehicle Manufacturers' Association (CVMA) more than welcomed the new proposed rules, saying it fully supports Canada's goal to reduce greenhouse gas emissions from both light duty and heavy duty vehicles, as well as new regulations to further reduce vehicle related smog causing emissions to improve air quality.

David Adams, President of the Global Automakers of Canada, told Financial Post the new rules will likewise enable automakers develop their medium- and long-term product plans.

Carbon emissions from Canada's transportation sector accounts for a quarter of all the country's GHG.

The final Regulations Amending the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations for model year 2017 and beyond will be published in the Canada Gazette, Part II, on October 8. These regulatory amendments represent further action to reduce GHG emissions while building on the existing Regulations for 2011-2016 model year vehicles.

While the proposed amendments to strengthen the On-Road Vehicle and Engine Emission Regulations and the Sulphur in Gasoline Regulations will be published in the Canada Gazette, Part I, on September 27. With these amendments, Canada is proposing to establish more stringent Tier 3 vehicle and fuel standards to provide cleaner air to Canadians.

According to an emissions audit submitted annually to the UN, Canada's emissions are expected to continuously climb, partially because of increased production in the oil sands.