U.S. Weighs Car-Emissions Policy

Obama Juggles Desires of California, Auto Makers in Exploring National Rule

By STEPHEN POWER and CHRISTOPHER CONKEY
The Obama administration is working to develop a single national standard to curb greenhouse-gas emissions from automobiles, a sign of the complexity it faces reconciling its environmental policy with its efforts to bail out Detroit auto makers.
A White House spokesman said President Barack Obama "believes that one national policy for autos would provide the industry with certainty while achieving our environmental and energy independence goals, and it is a topic the administration is exploring as part of the broader restructuring discussions with the auto makers."

Barack Obama
Administration officials are working on interrelated policies that affect the struggling auto industry. The Department of Transportation is working on new, more rigorous vehicle fuel economy standards for the 2011 model year. The Environmental Protection Agency is considering broad restrictions on global warming emissions. At the same time, the administration is considering whether to grant California a waiver from the Clean Air Act so the state can enforce its own tailpipe emissions standards, potentially stricter than federal rules.
At Mr. Obama's direction, the EPA will hold a hearing Thursday on California's waiver request.
The end result could be that auto makers have to boost the average mileage of their new vehicle fleets beyond 35 miles per gallon by 2020, the current federal requirement. The previous fuel-economy standards called for manufacturers passenger car fleets to average 27.5 miles per gallon and truck fleets to average 23.1 miles per gallon in the 2009 model year.
California's regulations call on the industry to achieve the equivalent of 35 miles per gallon by 2017 and over 40 miles per gallon in 2020, by some estimates. At those levels, the vehicles sold in the U.S. would look much more like those on offer in Europe -- lighter, smaller, and equipped with more sophisticated engine and transmission technology to reduce fuel consumption and thus, greenhouse gas emissions.
General Motors Corp. and Chrysler LLC, the two auto makers surviving on government loans, have struggled for two decades to make money on small cars in the U.S. Auto makers have been pressing the White House to adopt a single emissions standard for vehicles that would apply in all 50 states, arguing it would be a significant new cost burden to comply with different rules in various parts of the country.
It's not clear how the administration will establish a standard that reconciles the interests of California regulators and auto makers, which have been battling over the issue for years. The White House may also have to resolve differences between the Department of Transportation and the Environmental Protection Agency, which have a history of conflict over how to the regulate the auto industry.
On Wednesday, California's top air-quality regulator, Mary Nichols, said she is confident Mr. Obama's administration will allow the state to enforce its law, which calls for a 30% reduction in greenhouse-gas emissions from new cars by 2016. So far, 13 states and the District of Columbia have formally adopted the California standards, and several others are considering following suit.
The Alliance of Automobile Manufacturers, a trade group representing GM, Chrysler and other major manufacturers, expressed support for the White House position. "Now more than ever, we believe that a single, comprehensive, national program that bridges California's interests with those of other states and the federal government is the most effective way to move us all toward our goals of reduced greenhouse gas emissions."
Write to Stephen Power at stephen.power@wsj.com and Christopher Conkey at christopher.conkey@wsj.com