Jan. 26 (Bloomberg) -- President Barack Obama opened the way for California and other states to limit greenhouse-gas emissions from cars and trucks to curb global warming.

Obama, who pledged during his campaign to combat climate change and reduce U.S. reliance on fossil fuels, also said his administration will finish work started by President George W. Bush’s on new national standards requiring cars and light trucks to be more fuel efficient by 2011. He linked the actions to his plan to revitalize the economy.

“Our goal is not to further burden an already struggling industry; it is to help America’s automakers prepare for the future,” Obama said at the White House today. “We must ensure that the fuel-efficient cars of tomorrow are built right here.”

The trade group that represents General Motors Corp., Ford Motor Co., Chrysler LLC, Toyota Motor Corp. and other companies has argued that meeting stricter state standards would cost billions of dollars, create a patchwork of regulations and reduce the numbers of models automakers can sell in California and other states that want to adopt their own rules.

California seeks “a very challenging standard that right now only six vehicles could meet,” said Gloria Bergquist, vice president of the Washington-based Alliance of Automobile Manufacturers. “We would need a major technology breakthrough immediately.”

GM’s Reaction

GM, the world’s second-largest automaker, said today that it was ready to work with the administration “on policies that support meaningful and workable solutions and targets that benefit consumers from coast to coast.”

The president directed his Environmental Protection Administration chief, Lisa Jackson, to reconsider California’s request for a waiver to begin a state program aimed at cutting gases tied to global warming by 30 percent by 2016.

Bush denied the request by California and more than a dozen other states. During his two terms in office he resisted setting a national cap on emissions of carbon dioxide, which most scientists say is a major contributor to global warming.

California Governor Arnold Schwarzenegger, a Republican, and Mary Nichols, head of the state’s Air Resources Board, have pressed the new administration to overturn Bush’s decision. Environmentalists welcomed today’s news as a sign that Obama will move forward on an aggressive path toward regulating greenhouse- gas emissions.

‘Right Direction’

“It’s an important step in the right direction,” said Jonathan Lash, head of the Washington-based environmental advocacy group World Resources Institute. He has helped companies including General Electric Co. craft strategies aimed at profiting from a burgeoning market for clean energy products.

GE is among companies calling for federal rules on carbon emissions, arguing that they are needed to know how to proceed with long-term business investments.

Republican leaders reacted skeptically.

“Our nation’s automakers are struggling -- drastically restructuring and shedding jobs just to stay afloat,” said Antonia Ferrier, spokeswoman for House Republican Leader John Boehner of Ohio. “And now they are being forced to spend billions of dollars to comply with California’s emissions standards instead of using that money to save American jobs.”

GM and Chrysler last month got government pledges for as much as $17.4 billion in emergency loans to stave off bankruptcy. U.S. automakers said this weekend that about 988 of their dealerships closed or were consolidated in 2008 because last year’s sales rate of light trucks and cars was the lowest since 1992.

State Actions

Granting California’s request to regulate car emissions would also affect 13 other states that have adopted the same rules. Four more states are promising to do so as well.

“An immediate review of the waiver decision shows respect for California and the other 18 states -- representing more than half the U.S. population,” Senator Barbara Boxer, a California Democrat and head of the Senate Committee on Environment and Public Works, said in a statement.

Bill Kovacs, vice president of environment, technology, and regulatory affairs at the U.S. Chamber of Commerce, said the move would be an unnecessary burden for the automakers and may have wider effects that could imperil Obama’s proposals to create jobs amid a faltering economy.

Carbon Limits

Kovacs said the waiver moves the country closer to declaring carbon dioxide emission as a pollutant under the Clean Air Act, which under federal law would require an assessment of such pollution prior to all federal and private projects.

“It would drive all projects to a halt since everything emits Co2,” he said. Kovacs said it would “kill” Obama’s economic stimulus plan.

Obama is pressing lawmakers to reach a consensus on an $825 billion stimulus plan that will reduce taxes and boost spending on infrastructure projects. The administration says it would save or create as many as 4 million jobs.

Obama today also began work to complete new fuel-efficiency standards to begin in two years. The Transportation Department earlier this month said the outgoing Bush administration would delay setting new the rules, postponing action on a 2007 law that calls for boosting Corporate Average Fuel Economy, or CAFÉ, for the first time in three decades.

That left it up to Obama’s new administration to set guidelines for 2011 models before a March 31 deadline.

Obama is making an overhaul U.S. energy policy a key part of an economic stimulus package. His goals include doubling renewable-energy generating capacity in three years and accelerating an overhaul of the nation’s power transmission system.

He said job cuts by companies such as Microsoft Corp., Intel Corp. and UAL Corp. demonstrate the urgent need for the economic stimulus program.

“We can’t afford distractions, we cannot afford delays” in getting legislation through Congress, he said.

To contact the reporters on this story: Kim Chipman in Washington at kchipman@bloomberg.net; Edwin Chen in Washington at echen32@bloomberg.net

Last Updated: January 26, 2009 15:01 EST