B.C. Premier Gordon Campbell, left, and California Gov. Arnold Schwarzenegger joke as they sign an agreement to fight global warming in Vancouver. ((Chuck Stoody/Canadian Press))

California Governor Arnold Schwarzenegger and B.C. Premier Gordon Campbell signed a memorandum of understanding on climate change Thursday in Vancouver.

The agreement sets out targets for greenhouse gas emissions below 1990 levels.

But Schwarzenegger told the inaugural Pacific Economic Summit that the agreement doesn't dictate how that greenhouse gas goal will be achieved. He said the market and consumer choice will determine those decisions.

The agreement between B.C. and California also sets out a commitment to build the much-talked-about "hydrogen highway" along the West Coast by 2010.

That would involve the establishment of a chain of hydrogen gas stations from B.C. to California, so people could drive environmentally friendly hydrogen-fuelled cars.

In welcoming Schwarzenegger to B.C., Campbell said the former Hollywood star has become an international leader in pushing the green agenda.

In turn, Schwarzenegger thanked Campbell for his own passion on climate change and related issues, but added while the environment is important, the economy must also be protected.

He also told the crowd of businesspeople thathe and Campbell have a good relationship,one whichbegan earlier this year when Campbell visited California and the two agreed to work together on green initiatives.

Schwarzennegger was also very complimentary to B.C. businesses, singling out clean, green companies.

He noted that green initiatives will both protect the environment and fuel the economy, adding the two jurisdictions can experience a new gold rush as technologies are developed to protect the environment.

Schwarzenegger noted he had been to Vancouver many times during his movie career and now he's on a trade mission.

Vancouver is the governor's final stop in his three-day visit to Canada.

B.C. First Nations were part of the welcome,with an aboriginal ceremony of drumming, singing and dancing.

Schwarzenegger was also given three gifts from B.C. First Nations—a colourful blanket that was wrapped around him, framed native art representing a wolf and an elaborately decorated canoe paddle.

He told the crowd that First Nations people are the original environmentalists.

With files from the Canadian Press