The basics from the Raleigh News and Observer.
More quotes and such from the N.Y. Times
More detail on the economics from Business Week.
What is novel here is that for the first time national automobile standards include a provision for CO2 emissions (California has done this for a while).
Notice the consideration of demand and supply in the Business Week article.
(Side note: I must mention that I get a little irritated when journalists say "The law of supply and demand"... because of course, there is no law of supply and demand. There is a law of demand, and a law of supply. Econ prof pet peeve I guess.)
Anyway, the article also points out a need for the true price of gasoline to be reflected in the price we pay at the pump, otherwise, the new regs may only serve to create a glut of tiny cars that no one wants.
These standards in question are called C.A.F.E. standards (Corporate Average Fuel Economy), and raising them may have an unintended consequence. Can anyone see it?
There is some good basics on C.A.F.E. standards here from NPR. Notice that we have not raised the standards in a long time.