The Obama administration unveiled a plan to boost fuel efficiency standards for cars and trucks to an average of 35.5 miles per gallon by 2016—four years ahead of current schedule and up from an average of just 25 miles per gallon today.

The new standards (pdf) will also impose—for the first time ever—a limit on greenhouse gas emissions from vehicles at 250 grams per mile in 2016 under the new proposed rule. (That’s about 5.5 ounces per kilometer, for those of you who like your units mixed differently.)

There are very few vehicles capable of meeting the new standards today, which would mean more hybrids and possibly even electric or other alternative vehicles would have to hit the road within seven years for automakers to comply.

"As a result of this agreement, we will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years," President Obama said in a Rose Garden speech. In a nod to the concerns of beleaguered carmakers, Obama said, “this rule provides the clear certainty that will allow these companies to plan for a future in which they are building the cars of the 21st century."

The new standards would avoid tailpipe emissions of 890 million metric tons of greenhouse gases by bringing vehicle emissions down from roughly 400 grams per mile today—the equivalent of taking 177 million cars off the road (more than two-thirds of the entire American auto fleet) or shutting down 194 coal-fired power plants.

In addition, all classes of vehicles—from compact cars to SUVs—will be required to make fuel efficiency improvements: cars will need to go from roughly 27 miles per gallon today to 39 mpg in 2016 whereas trucks jump from roughly 23 mpg to 30 mpg. The program is expected to add roughly $1,300 to the cost of a vehicle, according to administration officials.

The U.S. Environmental Protection Agency (EPA) is also considering creating credits to help meet the standard for the development of additional greenhouse gas control technologies, such as multiplier credits for electric vehicles or plug-in hybrids or additional credits for "solar panels on hybrids, adaptive cruise control, and active aerodynamics," the proposed rule (pdf) says.

The EPA and the Department of Transportation will team up to craft the details. The rule, if approved, won't take effect until 2012. The new rule would be a compromise between the administration, the state of California and the auto industry. Carmakers have been waging a legal battle over that state's tough greenhouse gas emissions from vehicles standards. Under the compromise, California would adopt the federal standards.

"Overall, this bartered resolution confirms the pragmatic approach of the Obama administration to resolving climate change issues," says lawyer Deborah Schmall of the Paul Hastings law firm, while noting that lawsuits may drag on as the details of the agreement are worked out.

Oh, the fuel savings may be overstated, too, says management professor Richard Larrick of Duke University. He argues that gallons-per-mile is a more relevant measure as it directly corresponds to greenhouse gas emissions.

After all, boosting mileage from 10 to 11 mpg or 33 to 50 mpg saves the same amount of fuel (and therefore CO2 emissions): one gallon of gasoline every 100 miles. "As a nation, they're asking car drivers to reduce gas consumption by 1.14 gallons per 100 miles and they're asking truck drivers to reduce gas consumption by 1.02 gallons per 100 miles," Larrick says. Still, he says, "it's still a great plan because it is accelerating efficiency gains and because Detroit supports it."

Credit: © / Matteo Natale