An old program tucked into the new fuel efficiency standards could trigger an industry-wide trading market as automakers race to comply with the first-ever federal greenhouse gas emissions standards. How much automakers will take advantage of this mini-market is uncertain, however, as they've shown little willingness in the past to take part in similar arrangements.

The emissions-trading mechanism itself -- known as an average banking and trading (ABT) program -- is not new. The Environmental Protection Agency has used similar programs to regulate the transportation, water and electricity sectors since the late 1990s.

But the administration's new auto standards, laid out in detail last month by the EPA and the National Highway Traffic Safety Administration, mark the first time car companies can trade credits of carbon emissions. The combination of the new standards paired with the administration's focus on reducing economy-wide pollutants have led some experts to predict automakers will take advantage of the trading market despite having ignored similar opportunities before.

Experts fault the auto industry's competitive nature for the lack of participation in a previous ABT program to trade credits for tailpipe emissions. "Companies are reluctant to pay their competitors," said Charles Territo, communications director for the Alliance for Automobile Manufacturers. "In many cases, companies would rather pay a fine to the government."

"They saw it as a potential embarrassment," said Paul Portney, former president of the energy think tank Resources for the Future. "It was seen as a sign of weakness for them to have to buy... credits even though it might have made a fair amount of sense."

The new regulations, which will be finalized in March, involve two coordinated standards -- NHTSA's Corporate Average Fuel Economy standard, which was created in response to the oil embargo in the 1970s, and the carbon emissions standard, which is new and unlike the CAFE standard is administered by the EPA. Under the joint program, the CAFE standard would increase from 27.5 miles per gallon to 35.5 miles per gallon. The carbon standard is the CAFE standard displayed in grams of carbon dioxide per mile -- limiting carbon to 250 grams per mile. When automakers exceed these two averages, they will earn "credits" that they then can then transfer within their fleets or trade among each other.

The EPA said automakers will actually be able to take part in two separate ABT programs -- one for each standard -- making regulation a challenge and complicating the question of whether automakers will be able to pay a fine in lieu of compliance, potentially a key factor in compelling companies to trade with each other. Currently, the carbon emissions standard does not allow companies to pay a fine, while CAFE enforcement would continue to involve fining automakers who don't comply.

"These are very challenging standards, and manufacturers are going to need to use every tool in the box to comply," Territo said. "Depending on how under-compliance is determined, the ability to transfer credits between manufacturers may be more likely under the national program."

The bankruptcies, mergers and other economic hardships the industry has faced in the past year have created a larger push for the sector to "go green." This, on top of the administration's goal to have an economy-wide cap-and-trade system, could encourage companies to trade among each other. "It's clear there will be trading in the economy over carbon credits," Portney said. "I think the car companies will think there is no shame over them doing it."

Trading carbon credits among companies is just one component of the ABT program. Others include transferring credits within an automaker's own fleet, rolling over a deficit or surplus into the future and earning extra credits for technologies such as flex-fuel vehicles and improving the efficiency of air conditioning systems.

The overall goal of the carbon emissions ABT program is to give automakers more flexibility, explained an EPA official, who requested anonymity because the rules are not yet finalized. "From a carbon standpoint, companies will still be able to meet the standards, but in a much more flexible way that takes into account each product plan that each manufacturer has."

Michael Livermore, executive director of the Institute for Policy Integrity, a think tank affiliated with the New York University School of Law, said the ability to trade carbon emissions among companies, if utilized, could trigger automakers to go above and beyond what the government has called for. "If you didn't have a program like this, once you met the standard, there would be no reason to go further, but under this program there is," Livermore said. "You can go and sell them to someone else. It can push the best players the furthest. If the goal is to promote a start to a technological arms race for manufacturers to develop fuel efficient cars, this will help do that."

Some analysts say the overall program might still be flexible enough for companies to comply without resorting to inter-company trading. Like previous ABT programs for automakers, the carbon standard hinges to some degree on the size of the vehicle (the smaller the vehicle, the higher the standard). This, explained Carolyn Fischer, an expert on auto emissions with Resources for the Future, will help ensure that companies don't have a huge discrepancy within their fleets, which would make it more difficult to meet the standards. Companies can also continue transferring credits -- both CAFE and carbon -- across their light truck and passenger vehicle fleets. This could, as it seems to have done in past ABT programs, help them avoid trading with each other.

Despite automakers never taking advantage of the inter-company transferring component of previous ABT programs, the EPA official said it's a "flexibility" the agency will continue to allow, regardless of whether it's utilized or not. It could be telling, though, if auto companies still don't trade either CAFE credits or the new carbon emissions credits with each other.

"The more we ask of companies, the more likelihood they'll engage in trading," Livermore said. "We'll know the rules were strict enough if there is trading. If there's no trading, they didn't set hard enough requirements."

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