Obama begins reversing Bush climate policies

President Barack Obama began reversing the climate policies of the Bush administration on Monday, clearing the way for new rules to force auto makers to produce more fuel-efficient and less polluting cars.

The president told the Environmental Protection Agency to reconsider immediately a request by California to impose its own strict limits on vehicle carbon dioxide emissions, blamed for contributing to global warming.

Obama, a Democrat, took over from former President George W. Bush last Tuesday. Bush's Republican administration had denied the request, prompting California and other states to sue.

"The federal government must work with, not against, states to reduce greenhouse gas emissions," Obama said at the White House, taking a stab at his predecessor's policies.

"The days of Washington dragging its heels are over. My administration will not deny facts, we will be guided by them. We cannot afford to pass the buck ... onto the states."

Obama's directive, which is likely to result in a formal change in the coming months, could prompt as many as 18 states to follow California's lead by putting into effect tailpipe emissions standards that are tougher than federal requirements.

The president also directed the Department of Transportation to move forward with setting tighter fuel efficiency standards for automobiles starting with model year 2011, giving manufacturers 18 months to prepare.

The rules piled pressure on an ailing car industry struggling to survive in a deepening recession with the help of federal bailouts.

General Motors Corp said it is "working aggressively" to develop better hybrids and electric cars to reduce emissions and improve mileage, but policymakers must weigh in economic factors when making their decision.

"We're ready to engage the Obama administration and Congress on policies that support meaningful and workable solutions and targets," the company said in a statement.

Their plight may worsen as the U.S. recession deepens. Economists polled by Reuters in advance of Friday's Gross Domestic Product report think GDP contracted at a 5.4 percent rate on an annualized basis in the fourth quarter, which would be the worst performance since 1982.

SIGNALS ON ENVIRONMENT

Obama's steps were likely to be well received in Europe, which saw the United States under Bush as a roadblock to global action on climate change and hopes for greater U.S. efforts to reduce domestic greenhouse gas emissions.

It drew praise from environmentalists, who supported Obama's election, but could annoy labor unions, another key constituency, whose members are upset auto job losses.