The US president has announced new regulations for the car industry, aiming to cut greenhouse gas emissions by producing cleaner and more fuel-efficient vehicles.
The new rules will require all vehicles to have 30 per cent less carbon emissions, and use 30 per cent less fuel, by 2016.
"For the first time in history, we have set in motion a national policy aimed at both increasing gas mileage and decreasing green house gas pollution for all new trucks and cars sold in the United States," Barack Obama said on Tuesday.
He said the rules represents "not only a change in policy in Washington, but the
harbinger of a change in the way business is done in Washington".
Obama was referring to how the deal had gained the acceptance of diverse interest groups and how the new policy was a move away from these of George Bush, the former president, who was frequently criticised for ignoring evidence of global warming.
"We have done little to increase fuel efficiency of America's cars and trucks for decades," he said, calling the standards the start of a transition to a clean energy economy.
Cars will be more expensive because of the new regulations - by up to $600 per vehicle on top of the $700 price hike expected with the latest Corporate Average Fuel Economy (CAFE) rules already passed by congress.
However, drivers will likely be able to recoup the cost as they will have to buy less fuel over the vehicle's lifetime.
Potential savings
Obama said the new standards would save 1.8bn barrels of oil over the lifetime of the programme - the equivalent of taking 58 million cars off the road for a year.
The US congress does not have to approve the standards, which will be set for car models made in the year 2012 and onwards.
The new policy will give more certainty to struggling car manufacturers like Ford, General Motors and Chrysler, which have been battered by the financial crisis.
Alan Mullaly, the chief executive officer of Ford, said he was "absolutely pleased" with the new regulations, which he said would help drive development of sustainable vehicles which run on new generation energy sources.