Saving the Environment or Killing Detroit?

Jan. 27, 2009— -- Will cleaner air take the wind out of automakers' sails?

That's the question many are now asking after President Barack Obama took sweeping action Monday to reduce the amount of pollution that new American cars will be allowed to spew.

His move to curb auto emissions might be great for the environment, but several analysts said it's the last thing struggling automakers need.

"It's crippling in terms of its cost to the automakers," said Ron Harbour, a Detroit-based auto industry analyst with the consulting firm Oliver Wyman. "At this time, when all the automakers are gasping for air -- particularly the domestic ones -- it's a tough time to force that down their throat."

California, followed by 13 other states -- Arizona, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington -- has sought to impose tougher tailpipe emission standards than the federal government had in place.

The Environmental Protection Agency, under former President George W. Bush's administration, blocked California from imposing the stricter standards.

Obama has now asked the EPA to reconsider that decision.

"At a time of such great challenge for America, no single issue is as fundamental to our future as energy. America's dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation and funds both sides of our struggle against terrorism," Obama said. "It puts the American people at the mercy of shifting gas prices, stifles innovation, and sets back our ability to compete."

California's emissions rules would have cut vehicles' greenhouse gas emissions by 30 percent between 2009 and 2016. Since California is the largest car market in the country and it is cheaper to build one model of each car per nation, automakers would essentially have to change their entire lines to meet California's rules. Detroit resisted such a change, in part because of the cost associated with developing more-efficient vehicles.

"We hold no illusion about the task that lies ahead. I cannot promise a quick fix. No single technology or set of regulations will get the job done," Obama said. "But we will commit ourselves to steady, focused, pragmatic pursuit of an America that is freed from our energy dependence and empowered by a new energy economy that puts millions of our citizens to work."