5 Min Read
* Auto companies, UAW union on board
* Consumers may shoulder costs in higher car prices
* California plans standards beyond 2016 goals (Adds comment from California official, paragraphs 18-19)
By John Whitesides
WASHINGTON, May 19 (Reuters) - President Barack Obama took aim at climate-warming greenhouse gases on Tuesday and ordered the struggling auto industry to make more fuel-efficient cars under tough new national standards to cut emissions and increase gas mileage.
Obama said the standards, announced at a White House ceremony attended by auto industry and union leaders, would reduce U.S. dependence on foreign oil and give five years of cost certainty to an industry battling to survive.
"The status quo is no longer acceptable," Obama said in an announcement that will pressure carmakers to transform and modernize the industry to produce more efficient vehicles. [ID:nN19424242]
"We have done little to increase fuel efficiency of America's cars and trucks for decades," he said, calling the standards the start of a transition to a clean energy economy.
Obama has made fighting climate change a priority, and lawmakers in Congress have begun wrangling over a historic bill many hope will provide broader guidelines for controlling greenhouse gas emissions. [ID:nN19427337]
Growing public support for efforts to battle climate change and the weakened state of the U.S. auto industry, which is staying afloat through federal bailouts and restructuring at the government's direction, gave Obama a window of opportunity to impose the rules.
Criticism of Obama's announcement was limited, and focused on the higher production costs, the safety concerns created by producing lighter cars and fears from some observers about increasing government involvement in the industry.
"The government is now designing our cars. It's out of the hands of vehicle manufacturers," said auto industry consultant Larry Rinek.
Under the new standards, U.S. passenger vehicles and light trucks must average 35.5 miles per gallon (6.62 litres/100km) by 2016. The current law, approved by the Bush administration, requires a similar gain by 2020.
Obama said the new standards would save 1.8 billion barrels of oil over the lifetime of the program -- the equivalent of taking 58 million cars off the road for a year.
The Environmental Protection Agency would regulate and reduce tailpipe emissions for the first time under the standards.
The U.S. Congress does not have to approve the standards, which will be implemented through rules developed by the Department of Transportation and Environmental Protection Agency, which could take more than a year to complete.
The plan was praised by automakers, environmentalists and an array of politicians, but it will mean higher price tags for consumers. The new program will add about $1,300 to the price of producing a vehicle.
Obama said car buyers would recoup the money with the lower fuel costs realized under more efficient mileage standards.
"Over the life of a vehicle, the typical driver would save about $2,800 by getting better gas mileage," he said.
The plan could cut deeply into voracious U.S. gasoline demand, dealing another blow to a refining sector hard hit by recession and bracing for more climate legislation. [ID:nN19424376]
The program resolves a long-running dispute between the government and California, which sought a waiver from federal law to impose its own tough standards on emissions. That could have led to a patchwork of different state regulations.
California's top climate change official said America's most populous state was already planning the next stage of clean car standards.
"California will be immediately getting to work on what the standards should be for beyond 2016," Mary Nichols, who chairs the California Air Resources Board, said in a telephone interview. She expects "a much more stringent standard." [nN19441776]
Governor Jennifer Granholm of Michigan, whose state includes the capital of the beleaguered auto industry, Detroit, said the plan would give the industry cost certainty by setting a uniform national standard.
California Governor Arnold Schwarzenegger, who also attended the announcement, told reporters the weekend negotiations on the plan were "very intense."
"Then all of a sudden it all clicked and it came together," he said. "It really was a huge battle and the president has brought everyone together and now we're marching forward in the same direction."
The proposal is aimed at cutting climate-warming carbon emissions, which would fall by 900 million metric tons or more than 30 percent over the life of the program. (Additional reporting by John Crawley, Lisa Lambert, Kevin Krolicki and Peter Henderson; Editing by Peter Cooney)