Auto Industry Resigned to California's Leadership On Climate Change

President Obama has officially directed the EPA to review the decision to deny California (and 17 other states) a waiver under the Clean Air Act to regulate its own greenhouse gas emissions, and considering that Obama's EPA is about to hire the lead attorney in the Supreme Court case that found the EPA has the authority regulate carbon emissions, I expect we will see the waiver granted in short order.

"For the sake of our security, our economy and our planet, we must have the courage and commitment to change," Obama said in the East Room of the White House. "It will be the policy of my administration to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs."

Today's actions come as Obama seeks to fulfill campaign promises in the first days of his administration. The moves fulfill long-held goals of the environmental movement.

Lawmakers and environmentalists throughout California are predictably hailing the move. But notably, another group on board with the decisions are - wait for it - the automakers.

Auto-industry officials were surprisingly receptive to President Obama’s announcement about tightening emission standards, saying the steps he announced were the best they could hope for.

“It seems the president has set out a reasonable process,” said a top industry official who refused to be named. “He can say with credibility that there’s a new sheriff in town. Now, maybe there’s room to discuss this with stakeholders.”

The uncertainty of the process, given the Bush Administration's failure to set standards passed by Congress in the 2007 energy bill and this looming fight over the California waiver which could have ended up in Congress or the courts, may be a factor in the auto companies' tepid support. So too is the fact that Obama and the federal government still partially controls the fate of the Big Three in the auto industry bailout.

Eventually, we will much to what amounts to a national standard, with 40% of the country's population poised to back California's emissions targets and the auto industry forced to calibrate to the higher standard. This will SPUR innovation, not dampen it, and will eventually be a boon to an industry which has failed to adapt to changing needs for far too long.