Everyone agrees that America must break its dangerous addiction to oil. Our nation's security and prosperity demand it; so does the health of our environment. In no policy area is a radical break from the Bush administration needed more urgently.

Most of the oil we consume goes to power our cars, trucks and airplanes. The gas we burn emits carbon into the atmosphere, heating up the earth's climate. To pay for imported oil, we ship hundreds of billions of dollars abroad each year, often to unfriendly and repressive regimes. Your administration can break that vicious cycle by speeding America's transition to clean cars and clean fuels.

First you need to modernize outdated policies. Since the time of the last U.S. oil crisis, during the 1970s, America has relied on CAFE (Corporate Average Fuel Economy) standards to compel car companies to build vehicles that get better gas mileage. It is important to note that Congress did not create CAFE to address global warming, a challenge that was not yet widely understood at the time. Congress created CAFE as a way to force Detroit to build fuel-efficient cars, nothing more.

Clearly, though, CAFE no longer makes sense at a time when global warming is fast approaching the point of no return, and when soaring demand from fast-growing nations like China and India is bidding oil and gas prices up on a permanent basis.

You should therefore phase out CAFE and replace it with a new policy that focuses on cutting carbon emissions from cars and trucks. Before describing that new framework, let's review where things stand right now.

Oil consumption is a major contributor to global climate change, accounting for one-third of U.S. greenhouse-gas emissions. Passenger cars, light trucks, and SUVs account for nearly one-half of the 20 million barrels of oil consumed in the U.S. each day. If we are to sustain a car-centered national lifestyle, we must usher in a new era of clean, energy-efficient cars and trucks.

The Bush administration has abdicated its responsibility to spur change, and Americans have paid dearly for the absence of a responsible energy policy. Instead of meaningful reform, conservatives cling defiantly to the status quo and mislead the American public with disingenuous plans to drill our way to lower gas prices.

In fact, there is no way for America to drill its way to energy independence. The U.S. controls just 3 percent of the world's proven reserves, so as long as our transportation system runs on oil, America will be dependent on foreign countries. Instead of enriching such oil suppliers as Venezuela, Saudi Arabia, and Russia, we need to start investing more U.S. energy dollars here at home.

Lights Out at the Old CAFE

Which brings us back to CAFE. Shortly after Congress created them, CAFE standards helped boost mileage standards by one-quarter. Subsequently, however, falling oil prices undermined the consensus for tough action. So did some fierce resistance from Detroit: Automakers routinely complained that CAFE forces them to make costly trade-offs in terms of vehicle performance and safety. They also claimed that higher standards would compel them to build vehicles that consumers do not want.

A key reason CAFE's early successes stalled is because it set a lower miles-pergallon standard for trucks (20.7) than for passenger cars (27.5). Not surprisingly, since CAFE 's inception in 1975 the share of new vehicles manufactured as light trucks (SU Vs, minivans, and pickups) has increased dramatically from 20 percent of sales to more than 50 percent of the market today.

In December 2007, Democrats finally were able to lift the standard from 27.5 miles per gallon to 35 miles per gallon by 2020. That same year, a federal appeals court told the Bush administration to close the SUV loophole. Even with these tighter directives, the National Highway Traffic Safety Administration (NHTSA), which is primarily charged with CAFE's administration, has been stubbornly slow to translate these mandates into action.

In addition, CAFE still does a poor job of encouraging automakers to add more fuel-efficient models to their fleets. For example, a manufacturer of many big and some small cars could have a hard time achieving the standards, but a maker of only small cars would not have any problem at all -- even if the first manufacturer produced a more fuel-efficient small car than the second. In other words, the present standard does not necessarily encourage either manufacturer to build a more fuel-efficient small car.

The combination of the SUV loophole and the fact that CAFE only measures fleet averages has caused automakers to build more SUVs, while trying to keep their "average" up by also making very small passenger cars. This top-heavy, bottom-light approach means that consumers sometimes must choose between the cars they want and those that meet high fuel-economy standards.

We need a new approach. It no longer makes sense to wrangle over incremental increases in a standard that focuses only on the input side of the equation -- miles per gallon. To curb the emissions that are overheating the planet, progressives should focus on the other side of the equation: the carbon output of tailpipe exhaust.

That is why you should call for replacing CAFE with a new standard based on our real aim -- reducing carbon emissions. This would have a galvanic effect on automakers and help make America the world's leader in clean-car technology.

Carbon-based standards have several important advantages over CAFE. Most notably, they move performance measurements away from miles per gallon -- typically associated with gasoline -- toward a standard that more closely measures environmental impact. Measuring tailpipe emissions is really a more direct and efficient way to achieve CAFE's goals.

Look at it this way: If someone invented a car that ran on water, we would not be concerned with whether it got 20 miles per gallon or 30 miles per gallon. Efficiency for efficiency's sake is fine, but what truly matters now is reducing carbon emissions -- and the simple fact is that one of the best ways to emit less carbon is to use less oil.

Follow California's Lead

As on many other environmental issues, California is leading the way. Its vehicle standards set limits on the amount of carbon dioxide and other greenhouse gases that can be released from new vehicles, beginning with passenger cars, SUVs, and pickup trucks sold in model year 2009.

At least 18 states -- representing 45 percent of the car market -- have sought to follow California's standard, but the Golden State cannot get the process underway until the Environmental Protection Agency (EPA) grants it a waiver -- a process that has been blocked by the Bush administration.

California's tailpipe standards for vehicles encourage manufacturers to comply by building cars that run on cleaner fuels, including diesel, biofuels, electricity and hydrogen. The measure is designed to curb vehicle emissions of carbon dioxide and other greenhouse gases 30 percent by 2016.

The California Air Resources Board estimates that meeting California tailpipe standards would add, on average, about $1,000 to the sticker price of a new vehicle. Better efficiency, however, will save drivers about $700 per year in fuel. If gasoline were to return to nationwide price levels of $4 or more per gallon (hardly an outlandish prediction), that means consumers can recover the higher up-front cost of their investment in just one and a half years.

An early and important priority will be for you to allow the EPA to grant California a waiver. But an important first-term initiative will be to stitch these state efforts into a comprehensive federal tailpipe-standard program.

Under a "tailpipe trading" system, makers of more fuel-efficient vehicles could sell credits to competitors who fail to make the grade, a system similar to the tradable emissions allowances that helped reduce acid rain. All manufacturers would have a continuous economic incentive to innovate and improve fuel efficiency.

A Tailpipe Trading System

This brings us to a separate but closely related reform proposal: the establishment of a cap-and-trade system for carbon emissions. To set such a system in motion, the government would give away or sell trading allowances that add up to the total carbon-emissions limit set up under the cap. Emitters -- such as energy producers and factories -- can then sell excess trading allowances to those who cannot cheaply curb emissions.

This creates a powerful incentive for companies to reduce their own pollution levels. In addition, an emissions-based standard, coupled with a tailpipe-trading system, could be integrated into a nationwide "cap-and-trade" regime that limits all U.S. carbon-dioxide emissions from whatever source. America is the only developed country that has not put a price on carbon emissions. By bringing our nation into parity with other advanced economies on cap-and-trade, you would help galvanize action on three fronts.

First, a new U.S. cap-and-trade system would create the world's largest carbon-dioxide market. Putting a price on carbon-containing fuels will unleash a powerful torrent of investment in clean-energy technologies. This, in turn, would generate billions of dollars in new business activity and millions of new jobs.

Second, a tailpipe-trading system for carbon would give automakers a profit motive to produce cars and trucks that keep carbon-dioxide emissions under set limits. Carmakers whose fleets miss the mark could buy carbontrading credits from any company subject to the national carbon cap (not just other carmakers), or pay into a fund that could be used to further spur innovation. In other words, trading helps to reduce the total cost of building the fuel-efficient cars that Americans want.

Third, there may be some administrative advantages to moving from miles-per-gallon to carbon standards. The design and administration of such a program at the federal level could be moved away from the historically reform-averse NHTSA to the EPA, which already performs some CAFE testing and measurement programs and will most likely administer a national cap-and-trade system.

Despite the promise of such a tailpipe-trading system, Detroit carmakers have challenged the California emissions law, arguing that fuel economy is a national issue and not one to be decided state-by-state. Mr. President, you can end the gridlock by first granting California its long-sought waiver and then urging Congress to replace CAFE with a national tailpipe-trading system for carbon.

If history is any guide, the auto industry will at first resist any major policy shift, particularly at this financially challenging time. In December 2008, the House of Representatives approved a $14 billion loan to the Big Three U.S. automakers. The measure included a provision that would have barred the car companies from pursuing lawsuits against California and other states that want to implement tougher tailpipe emissions standards. Unfortunately, the White House insisted that the California waiver be dropped from the bill as it moved to the Senate. In any case, Republicans killed the bill in the Senate. The White House subsequently offered Detroit what essentially amounts to a three-month, $17.4 billion bridge loan, with no requirement that automakers meet more stringent state emissions' standards. Mr. President, if you and Congress opt to provide Detroit with additional taxpayer dollars, then automakers should have to hold up their own end of the bargain by producing a new generation of market-ready clean cars.

It would be in U.S. carmakers' own interest to embrace the challenge of leading the world in the development and deployment of such vehicles. The Japanese and German auto industries have seen the writing on the wall and are rushing to get ahead of the clean-fuel curve, starting with hybrid cars. Keeping the U.S. market sheltered from such trends would be a particularly short-sighted form of protectionism.

There's a saying: "That which gets measured gets done." By measuring carbon emissions, we can improve economic efficiency, protect our environment, and reduce our dependence on foreign oil. These are objectives worthy of a new president.

Jan Mazurek has directed PPI's energy and climate work since 2001. Mazurek is an expert in greenhouse-gas market design and clean-energy technologies. She has published one book with the MIT Press (2003) and co-authored a second with Johns Hopkins/RFF (1998).