By Maggie Shiels In Sacramento

California is aiming to become the first US state to regulate emissions of greenhouse gases, in a move that has cheered greens but left car manufacturers fuming.

If we can come up with the technology for vehicles to be cleaner, it could be a boon to our economy

Assemblywoman Fran Pavley

Governor Gray Davis is preparing to sign into law a landmark piece of legislation, known as AB1493, which will require car makers to reduce CO2 emissions from cars and light trucks by 2009.

In a state that favours thirsty sports utility vehicles that average 16 miles per gallon in town, the legislation has been the subject of a multi-million dollar lobbying campaign.

Car manufacturers contend it will result in higher priced vehicles, reduce choice and cost jobs.

Its supporters, meanwhile, say the crackdown will set a much-needed environmental precedent.

Price spikes

The car lobby is portraying itself as the consumers' friend.

"Our problem with this bill is primarily economic," says Peter Welch, government affairs spokesman for the California Car Dealers Association.

Where California leads, the rest of the US follows

"This bill will force manufacturers to send us more of the smaller high mileage vehicles and that is going to cause price spikes for the most popular vehicles."

The industry is particularly troubled because where California leads, other states tend to follow.

California, the most populous US state, accounts for 10% of the nation's vehicle sales.

The Alliance of Automobile Manufacturers says the industry employs 463,000 people in the Golden State through manufacturing, sales and design, and sells about $100bn-worth of cars each year.

The powerful United Auto Workers trades union is also opposing AB1493, claiming that jobs are at stake if larger cars are priced out of the market.

Crisis, or opportunity?

But AB1493 supporters say the industry's reluctance to take the initiative on global warming has forced the government's hand.

Groups like the Bluewater Network, a national environmental organisation which was instrumental in helping draft AB1493, say car makers can either see it as an opportunity or a death sentence.

Dennis Hollingsworth says voters are worried

"If manufacturers are forced to create cleaner cars for California, they might as well create them for the whole market," says Russell Long, Bluewater's chief director.

That's also the belief of the bill's author, Democrat Assemblywoman Fran Pavley.

"If we can come up with the technology for vehicles to be cleaner, it could be a boon to our economy," she says.

No done deal

The public seems to be in two minds.

Two floors down from Ms Pavley's office in the State Capitol in Sacramento, Republican Assemblyman Dennis Hollingsworth, who opposes the bill, says he has been inundated with letters from businesses and constituents concerned about cost increases.

"They won't be able to afford to buy newer cars that have new safety features like second-generation air bags, side air bags or anti-lock brakes," he says.

AB1493 is not a done deal yet.

A consortium of 13 American, European and Japanese Automakers is now looking at a referendum to block the bill, and may even take the issue to court.

"Everything is on the table," says Gloria Berqhuist, spokesperson for the Alliance of Automobile Manufacturers.