By Michael Renner

In early 1942, the administration of Franklin D. Roosevelt directed the entire U.S. auto industry to make a sudden and wholesale switch from producing cars to churning out tanks, armored cars, tank engines, and aircraft propellers. Close to 4 million vehicles had rolled off assembly lines the previous year, but emergency wartime priorities brought the nation’s auto production to zero for three years as the sale of private cars was banned. After World War II ended, the reconversion from a wartime economy to a peacetime economy was carried out with equal speed, accompanied by careful planning.

Today, facing an emergency of a different nature, it is imperative to consider a similar break with business-as-usual. Over the past half-century, automobile manufacturers in the United States and the rest of the world expanded production from 8 million vehicles in 1950 to some 74 million in 2007. The industry has grown to become a major driver of climate change. The U.S. “Big Three” manufacturers—GM, Ford, and Chrysler—have for two decades peddled oversized, gas-gulping SUVs that were good for short-term profits but lethal for the planet. This strategy has left Detroit with few options now that the financial crisis, rollercoaster oil prices, and unease about peak oil are weighing heavily on consumers’ minds.

Facing bankruptcy, the Big Three are now asking for a government bailout. Public and Congressional opinion has been skeptically, but Barack Obama may respond more favorably after he becomes president. The decision is not an easy one: an open-ended rescue rewards corporate failure, yet rejecting any sort of intervention risks massive job loss. Even so, there is a silver lining. Taking the 1940s experience to heart, this is a generational opportunity to revolutionize the industry—and more broadly, to reinvent transportation policy for sustainability. It is time for a strategic overhaul aimed at boosting vehicle fuel economy and reviving the long-neglected public transportation sector.

Corporate Average Fuel Economy (CAFE) standards remained largely unchanged from the mid-1980s until December 2007, when Congress passed the Energy Independence and Security Act of 2007. The law raised the combined standard for new cars, pickup trucks, and SUVs to 35 miles per gallon by 2020. Given that only 1.5 percent of vehicles sold in the United States in 2008 rated 35 mpg or more, this seems an appropriate challenge. Yet the more-efficient models produced in Japan and Europe today, and the fact that even a newcomer such as China has adopted more stringent fuel economy standards than the United States, suggest that Washington should adopt far more ambitious targets—at least 50 mpg by 2020, with continued improvements in later years.

An injection of public resources into the auto industry should take place under stringent conditions:

· Replace current management at the Big Three, and impose limits on executive compensation.

· Mandate that R&D and commercialization efforts are focused unequivocally on developing high-efficiency vehicles. This effort could entail more-efficient gasoline/diesel-powered cars, as well as hybrids and plug-ins (along with mandatory limits on vehicle weight and engine power).

· Outlaw the sale of vehicles that do not achieve a minimal level of fuel efficiency, with a floor that rises each year on an ambitious sliding scale.

· Buy up the least efficient vehicles currently on the road—in recognition of their “built-in” consumption that will otherwise drag down average fleet fuel efficiency for years.

· Offer tax rebates or other incentives for consumers who purchase the most-efficient models.

A green transportation policy also needs to look beyond autos and to rebalance the transportation system. Unlike other industrialized countries, the United States features a passenger rail system that occupies little more than a niche and is burdened by outdated tracks, ancient locomotives, and archaic signal systems. Aside from a handful of cities, urban mass transit remains limited, largely a consequence of land-use policies that have led to sprawling settlements. And decades of neglect have led to a situation where the country lacks even the capacity to manufacture modern locomotives and rolling stock domestically.

A green transportation overhaul would overcome these handicaps by:

· Making substantial and sustained investments in rail and light rail (while limiting highway spending principally to repairs of crumbling infrastructure such as bridges).

· Dedicating adequate R&D budgets to developing modern rail and bus technologies.

· Converting part of the bloated car-manufacturing capacities to produce rail and mass transit systems.

· Overhauling land-use policies to stimulate denser settlements that permit public transit, reduce reliance on motorized transportation, and make biking and walking realistic options.

Overall, such a course would stimulate innovation, reduce carbon emissions and air pollutants, inject urban and suburban areas with new vigor and vitality, and generate or retain large numbers of well-paying jobs.

Michael Renner is a senior researcher at the Worldwatch Institute, a Washington, D.C.-based environmental research organization. He is a co-author of the recent Worldwatch report Green Jobs: Working for People and the Environment.