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President Barack Obama made the first big green move of his Administration by simply getting out of the way. Speaking from the White House, the President on Monday announced that he was directing the Environmental Protection Agency (EPA) to reconsider an application by California and 13 other states to set stricter limits on greenhouse-gas emissions from cars and trucks, opening the way for tighter fuel efficiency standards nationwide. Obama is also directing the Department of Transportation to issue guidelines that will ensure the U.S. auto fleet reaches an average fuel economy of 35 miles per gallon (m.p.g.) by 2020 at the latest. Together the directives — the first official memorandums issued by the new President — signal Obama's willingness to take on America's disastrous auto sector, which is bleeding money even as it contributes heavily to climate change and the country's addiction to foreign oil. "The days of Washington dragging its heels are over," he said. "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." (See the top 10 green ideas of 2008.)

For environmentalists, who cheered Obama's new policies even before they were official, the White House's reversal on the California waiver request was particularly sweet. In 2002 California passed regulations that would require automobile manufacturers to cut greenhouse-gas emissions from their vehicles by nearly a third between 2009 and 2016 — effectively resulting in a fuel economy standard of 36 m.p.g. That would have been a significantly tougher standard than the federal rules (the 2007 Energy Act did require corporate average fuel economy [CAFE] to approach that figure, but not until 2020). California requested a waiver for its own tough standards — under the Clean Air Act, the state has the right to ask to set tougher environmental rules than the Federal Government — but in an unprecedented move in December 2007, Stephen Johnson, the Bush-appointed head of the EPA, denied California's request. (Read "Obama Cleans Up After Bush.")

For greens, that denial was a sign of just how intransigent the Bush Administration had become on global warming. Not only would the Bush EPA refuse to take action on its own to slow the growth in carbon emissions, it would actively prevent states — even ones with Republican governors — from taking steps on their own. Now, with Obama directing his EPA to reconsider the waiver — and new EPA head Lisa Jackson has said that she would "very, very aggressively" review the request — the door is open to California once again taking the lead on cleaner cars. "It's a tremendously important step because we are in an urgent race against the climate crisis," says Vickie Patton, a senior attorney for the Environmental Defense Fund.

The more ambitious fuel economy standards, if adopted, will force the auto industry to rapidly retool to produce more efficient cars and trucks. Auto manufacturers have fought California's rules in court, arguing that allowing the state to go forward on its own would create a patchwork of regulations that would burden an already struggling industry. But in the past, the Federal Government has often followed California's lead, meaning the feared patchwork could soon become the national standard. Greens expect the Obama Administration to push the country in that direction. (As a Senator, Obama called for fuel economy to rise to 40 m.p.g.) Although automakers say the cost of building more efficient cars will be passed on to consumers, California's Air Resources Board has found that, as gas bills fall with cleaner cars, the average low-income household could save about $300 a year under the state's regulations. "Allowing California and other states to aggressively reduce their own harmful vehicle tailpipe emissions would be a historic win for clean air and for millions of Americans who want more fuel-efficient, environmentally friendly cars," said California Governor Arnold Schwarzenegger today in response to Obama's announcement. (See pictures of the world's most polluted places.)

Obama is hardly the first American President to declare war on the country's foreign oil habit — President George W. Bush himself famously said that America was "addicted to oil." And it won't be easy for the U.S. auto industry, already on life support, to shift quickly to more fuel-efficient models after years of resisting them. But the very fact that Obama chose to tackle fuel economy at the start of his Administration gives greens hope. "President Obama has done more in one week to reduce oil dependence and fight global warming than President Bush did in eight years," said Daniel Weiss, director of climate strategy at the Center for American Progress. It truly is a change.

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• Bryan Walsh