Gray said it was vital to get China and India on board in reducing emissions.

"We just can't do without them," he told a news briefing.

"I think there are mechanisms that could be retaliatory ... that could be utilised if China and India don't engage.

"You could probably find a WTO-compliant way -- for example you could require goods to have to pay a fee related to the carbon expended in manufacture," he said.

"There are ways you could do this and our Congress is certainly looking at it, but I think it would be better to have an agreement ... and that's what this is all about -- trying to get China and India to engage."

Gray said he believed that up to one-third of California's pollution blew across the Pacific Ocean from China. "If they don't sign up, nothing which we do is going to matter very much," he said, adding that one estimate showed that shutting down all emissions from Britain would be cancelled out within a year by growth in emissions from China.

Gray said it was positive that China and India had agreed to send representatives to the two-day conference on climate change and energy security in Washington from Thursday.

"I think we've seen a breakthrough ... it's the first time they've really shown up with high-level people who are going to discuss this in great detail."

ALL BIG EMITTERS

The meeting will be attended by the Group of Eight rich countries -- the United States, Canada, France, Britain, Germany, Italy, Russia and Japan -- as well as China, India, Brazil and Indonesia.

These countries account for 80 percent of greenhouse gas emissions and the Washington meeting will try to advance the adoption of clean energy technology to contribute to UN talks.

UN climate change negotiations will take place in December in Bali to try to agree a way to cut emissions after the Kyoto Protocol expires.

President George W. Bush pulled the United States out of the Kyoto treaty, which requires 36 industrial nations to cut greenhouse emissions by at least 5 percent from 1990 levels by 2012. Bush says Kyoto unfairly burdens rich countries while exempting developing countries such as China and India.

Developing nations say rich states built their economies without emissions restraints and argue that they should have the same opportunity to establish their economies now.

Gray also said the European Union would likely face a trade battle if it went ahead with plans to include aviation in its emissions trading system despite US efforts to discourage it.

"We don't think Europe has the authority to do it," he said.