This week, the Environmental Protection Agency will do more than set new fuel efficiency standards for cars. It will put a price on carbon.

Within this historic climate change regulation is a powerful new way of thinking about greenhouse gas emissions: as costs that will borne by society. Burning oil in cars imposes a steep price tag, from dirtier air now, to more expensive flood insurance in a decade, to potential climate catastrophe for our grandchildren.

The federal government has taken note of these hidden costs and is now using them to weigh the benefits of curbing our emissions. It’s a smart move: regulations might not seem worth doing if we pretend these price tags said “free.” But when the real costs of business as usual are recognized, the need to rein-in emissions is obvious.

EPA’s Corporate Average Fuel Economy (CAFE) standards are a big, green deal in and of themselves. These standards embody common sense greenhouse gas reductions and, as we can tell from Detroit’s recent meltdown, should have been done a long time ago. The new standards will save consumers billions at the pump, wean us off OPEC’s pipelines and drive technology innovations here in America.

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And of course it will help to slow down our contributions to the greenhouse gases that are warming our planet. Using the new carbon price, EPA estimates that the rule will save $16.4 billion in climate costs down the line.

While Members of Congress work towards a legislative path for a larger carbon pricing plan, EPA’s recognition of the costs of carbon emissions is a strong and important move. For almost a century our nation has ignored the ways greenhouse gases have adversely affected our long-term bottom line. We focus only on the price of a gallon at the pump and close our eyes to the price of we are imposing both on ourselves and our children.

So kudos to EPA Administrator Lisa Jackson for killing two carbon emitting birds with one stone. With these new and improved CAFE standards, we save money with more miles per gallon and take an important step toward a saner energy economy.

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