President Barack Obama
on Tuesday will propose the most aggressive increase in U.S. auto fuel
efficiency ever in a policy initiative that would also directly
regulate emissions for the first time and resolve a dispute with
California over cleaner cars.

A senior administration official, speaking to reporters late on
Monday on the condition of anonymity, said average fuel standards for
all new passenger vehicles -- cars and light trucks -- would rise by 10
miles a gallon over today's performance to 35.5 miles per gallon
between 2012-16.

Climate-warming carbon emissions would fall by 900 million metric
tons, or more than 30 percent over the life of the program, the
official said.

All companies will be required to make more efficient and cleaner
cars, the official said, saying the government estimates the program
will save 1.8 billion barrels of oil.

U.S. and key overseas automakers, including General Motors Corp,
which is on the verge of probable bankruptcy, and efficiency leader
Toyota Motor Corp of Japan, support the plan, an industry trade group

GM and the auto industry benefit by having more consistency and
certainty to guide our product plans, GM Chief Executive Fritz
Henderson said in a statement.

Toyota Motor Sales USA President James Lentz said the single
national standard will enhance vehicle choice for consumers. The new
program, according to the administration, will add about $600 to the
price of producing a vehicle compared to current law, which requires
automakers to achieve a fleet average of 35 mpg by 2020, a 40 percent
increase over today's performance.

US auto companies fought significant increases in fuel standards for
decades before Congress and the Bush administration agreed to stricter
targets in 2007. Some vehicles, most made by overseas manufacturers,
already meet or exceed the standards set to be proposed.


California also supports the Obama proposal, the official said.
California had sought a waiver from federal environmental law to impose
its own regulations to cut auto emissions but Bush administration would
not permit it. Also, auto companies sued to stop California on grounds
the initiative would create a patchwork of rules if other states
followed suit instead of a single national fuel efficiency standard.

California has agreed that they will defer to the proposed national standard, the official said, if it is finalized.

Senator Barbara Boxer, chairman of the Environment and Public Works
Committee, called the development good news for all of us who have
fought long and hard to reduce global warming and reduce U.S.
dependence on imported oil.

The 30 percent reduction in emissions is more aggressive than what
California and other states that have supported its bid for a waiver
have sought.

The administration in April opened the way to regulating emissions
by declaring climate-warming pollution a danger to human health and
welfare, in a sharp policy shift from the Bush administration.

The new policy would give automakers flexibility to meet the
standards and would weigh the impact on the environment of carbon-based
fuels and other vehicle systems that emit emissions, like air

This could be the breakthrough we've been looking for on clean
cars, said David Friedman, research director of the clean vehicle
program at the Union of Concerned Scientists.

The plan assumes average gas prices of $3.50 per gallon by 2016,
which administration officials hope will help push consumers into more
fuel-efficient cars and trucks.

Automakers are aggressively pursuing better hybrids and electric
cars. But more recent declines in gas prices in the later half of 2008
and so far this year due to a recession-induced demand falloff have
revived sales, in some cases, of less efficient pickups and SUVs.

To help lift the industry out of its sharp sales slump, Congress is
considering legislation that would offer consumers up to $4,500 to
trade in older, less fuel-efficient models for vehicles that get
sharply higher gas mileage.

Separately, a key committee in the U.S. Congress on Monday kicked
off what promises to be a week-long climate change debate as Democrats
aimed to advance a bill to slow global warming and Republicans
maneuvered to kill a central part the plan they say will hurt the U.S.