Obama Auto Plan Links Auto Emissions and Mileage Standards

WASHINGTON -- With two of Detroit's Big Three automakers no longer able to resist, the Obama White House will announce sped-up fuel economy standards that will require all auto-makers, including Detroit's foreign competitors, to increase fleet fuel efficiency by 5 percent per year starting in 2012.

The new rules will require a fleet fuel efficiency standard of 35.5 miles per gallon by model year 2016, a big jump from the 2009 model year requirement of 25 mpg. A senior administration official said the changes (when compared to current pollution and vehicle use totals) will have the effect of removing 900 million metric tons of carbon dioxide from the air, taking 177 million cars off the road, and shutting down 194 coal-fired power plants.

A senior administration official called the standards "tough and historic" and predicted it will be achieved with only minor modifications to vehicle and engine design.

"You will see some changes," the official said, adding that "off-the-shelf" technology will allow most automakers to retro-fit their cars, light truck and SUVS "without dramatically changing them."

For 2016 -- the final year new the rules will apply -- the fleet fuel efficiency standard for all domestically sold passenger cars will be 39 mpg. It will be 30 mpg for all domestically sold light trucks and sport utility vehicles. The average of these two equals a passenger car and light truck fuel efficiency standard of 35.5 mpg. The current requirements are 27.5 mpg for cars and 23.1 mpg or trucks. The tighter standards will first affect the 2011 model year for cars and trucks.

An official said consumers will still have a wide-range of options on vehicle design and horsepower because "every single category of vehicle has to become more efficient." The uniformity of change, the official said, "will preserve" options for the vehicle-buying public.

The administration will also impose the first-ever tailpipe emission standard for every class of vehicle -- a move that will bring regulations of fuel efficiency and pollution under one set of rules. The Department of Transportation and the Environmental Protection Agency will, for the first time ever, jointly monitor and enforce fuel efficiency and tailpipe emission standards.

The standards are expected to increase the cost of a vehicle, on average, by $1,300 by 2016. A senior administration official predicted that cost would largely be offset by savings in gasoline expenses over the life of the vehicle. To calculate that savings, the administration predicts gasoline will cost $3.50 per gallon in 2016.

Detroit's Big Three had long-resisted the kind of economy standards they will embrace at the White House on Tuesday. But with the government having poured billions into GM and Chrysler and with Chrysler in the throes of a government-supervised bankruptcy and GM facing the possibility of a similar fate by month's end, industry leverage appears to be minimal. Ford will also embrace the new rules, even though it has not received any federal bailout funds.

"We are pleased that President Obama is taking decisive and positive action as we work together toward one national standard for vehicle fuel economy and greenhouse gas emissions that will be good for the environment and the economy," Ford said in a statement.

The domestic automakers do not leave empty-handed, though. They won from the government a commitment to a single set of fuel and pollution standards until the 2016 model year. Detroit was far behind its foreign competitors on fuel efficiency and faced the frightening prospect of manufacturing cars to meet two sets of standards -- California's and the federal government's.

The new rules will incorporate California's tougher standards but eliminate any market uncertainty -- a move one industry source compared to allowing Detroit's big three to walk into the future carrying one anvil instead of two.

Obama will announce the moves Tuesday at a huge White House ceremony designed to underscore cooperation among automakers, environmentalists and the two governors whose states have most closely watched the fate of U.S. auto-making -- Republican Arnold Schwarzenegger of California and Democrat Jennifer Granholm of Michigan.

California approved tougher fuel efficiency standards and was eyeing a June 30 ruling from the Environmental Protection Agency to enforce them. California ordered a fleet average of 35.5 mpg by 2016. The old federal standard sought that efficiency by 2020.

The new federal standards will match California's -- but do so in a way that protects Detroit from having to produce one fleet of cars to meet the tougher California standard (embraced by 13 other states) while simultaneously producing another fleet that met the more lax federal standards.

"It's going to be tough to meet these new standards," said one domestic auto source, "but there is industry buy-in behind having one national standard."

The White House ceremony, FOX News has learned, will attract the following auto heavyweights:

Frederick "Fritz" Henderson, CEO of General Motors

Robert Nardelli, CEO of Chrysler

Allan Mulally, president and CEO of Ford

Ron Gettelfinger, president of the United Auto Workers.

Representatives from Toyota, Honda, Mazda, Nissan, Volkswagen, Mercedes and BMW are also expected to attend.

The White House said some of the nation's top environmental groups will also appear to endorse the policy changes.