California getting increasingly difficult on anti-pollution rules. (Commentary).

THE U.S. auto industry chalked up a victory over environmentalists last March when the U.S. Senate rejected a measure proposing tougher fuel standards for vehicles.

The federal energy bill now heading toward passage lets the U.S. Department of Transportation continue setting the rules, which critics complain are too lenient to automakers that sell air-polluting sport utilities and other large vehicles.

In California, however, the industry is facing the prospect of a tough new law curbing vehicle emissions -- one that's potentially as troublesome as the fuel-economy legislation they defeated in Washington.

California lawmakers are pushing ahead on a measure that would require automakers to cut carbon dioxide emissions, the combustion byproduct many blame for harming the atmosphere.

In practice, this means car engines have to be smaller or more efficient, since burning less fuel provides the quickest way of cutting carbon dioxide. Barring that, drivers might be forced to leave cars at home one or more days a week.

California's proposals could have the same effect as tighter federal rules under which cars would average 27.5 miles per gallon and light trucks, including sport utilities and pickups, must average 20.7 miles a gallon.

Fired by smog

For anyone convinced that global warming is a clear danger, the state's stance could be seen as a symbolic protest against the U.S. decision to reject the Kyoto accord, which would have required the U.S. to cut carbon dioxide emissions by 7 percent below 1990 levels by 2012. The European Union and Russia may ratify the treaty later this year.

Unhappy as auto executives are over states passing air-pollution rules, they become livid when states also set their own fuel-efficiency regulations. Under federal law, states can pass pollution laws stricter than Washington's, though fuel-economy regulation is supposed to be a federal matter.

California, where persistent smog ignited the environmental passions of many citizens, has long had a go-it-alone tradition. The state passed its own air pollution laws prior to the first federal Clean Air Act of 1970.

"This is all about making a statement that California is the center of the universe in the environmental debate," fumed Chris Preuss, a General Motors Corp. spokesman. "The sky is the limit in terms of the pain they can inflict."

Zero-pollution goal

For years, automakers were forced to equip and tune vehicles differently to comply with California's stricter air-quality rules. Then, even as federal standards caught up with California's, the state began raising the bar.

To push research into electric cars and other alternatives to the internal combustion engine, the California Air Resources Board (CARB) mandated that 10 percent of each automaker's sales in the state emit no pollution. The law began to take effect this year.

General Motors invested hundreds of millions of dollars in a battery-powered car in the 1990s, hoping to satisfy state regulators as well as build a new market. While the automaker sold no more than a few thousand of the vehicles, it gained credits to help it comply with the 10 percent zero-emission rule.

General Motors, DaimlerChrysler AG and some dealers are suing the state to overturn the zero-emission mandate, on the ground the rules as written won't clean up the air.

Cars like the battery-powered vehicle don't emit carbon dioxide. Fuel-cell cars, which reformulate hydrocarbons like gasoline into hydrogen and hydrogen into electric power, emit carbon dioxide and water vapor as byproducts.

Battery buggies

Ford Motor Co. also developed battery-powered vehicles to meet California's restrictions. The vehicles, similar to electric golf carts, are part of Ford's Think! Neighbor line.

Since Ford sells more than 400,000 models of all types in the state each year, the No. 2 automaker must figure out how to sell 40,000 electric cars to comply with the rules. Ford intends to add a slightly larger electric vehicle, the Think! City, which can be driven on the open road.

Ford isn't providing sales figures for the Neighbor, which costs $6,000 to $8,000. It doesn't meet open-road standards and is intended mainly for gated communities. Some vehicles have been donated to the National Park Service, which counts toward meeting California's 10 percent requirement.

Greg Dana, vice president of environmental affairs for the auto industry's main lobbying group, says automakers are intent on fighting California's increasingly difficult and expensive anti-pollution measures.

"Once this got past the assembly and went to the Senate, we decided to put a bigger push on to stop it," he said. "We've been getting lots of calls from people in the state who don't want it."

It's not clear what will happen when a final version of the anti-carbon dioxide bill comes before Gov. Gray Davis, who has been vague about his position.

Meantime, a coalition of unions, manufacturers and auto companies is trying to convince Davis the state shouldn't single- handedly try to restore the atmosphere by abolishing the combustion engine.

Doron Levin is a columnist with Bloomberg News.