Following a major directive from the Obama administration, the U.S. Department of Transportation (DOT) and Environmental Protection Agency (EPA) Thursday established historic new rules that set the nation’s first national greenhouse gas emissions standards.

The standards will significantly increase the fuel economy of all new passenger cars and light trucks sold in the United States. The rules could potentially save the average buyer of a 2016 model-year car $3,000 over the life of the vehicle and, nationally, will conserve about 1.8 billion barrels of oil.

The new program will also reduce carbon dioxide emissions by about 960 million metric tons over the lifetime of the vehicles regulated, equivalent to taking 50 million cars and light trucks off the road in 2030.

“This is a significant step toward cleaner air and energy efficiency, and an important example of how our economic and environmental priorities go hand in hand,” said EPA Administrator Lisa P. Jackson. “By working together with industry and capitalizing on our capacity for innovation, we’ve developed a clean cars program that is a win for automakers and drivers, a win for innovators and entrepreneurs, and a win for our planet.”

Starting with 2012 models, the rules require automakers to improve fleet-wide fuel economy and reduce fleet-wide greenhouse gas emissions by approximately 5% a year. The National Highway Traffic Safety Administration (NHTSA) has established fuel economy standards that strengthen each year, reaching an estimated 34.1 mpg for the combined industry-wide fleet for model-year 2016.

Because credits for air-conditioning improvements can be used to meet EPA standards (but not NHTSA’s standards) , the EPA standards require that 2016 models must achieve a combined average vehicle emission level of 250 grams of carbon dioxide per mile. This is equivalent to 35.5 miles per gallon if all reductions came from fuel economy improvements—a 10-mpg increase over current standards.

“These are the first national standards ever to address climate change,” said EPA Assistant Administrator for Air and Radiation Gina McCarthy. “Over the coming years, America will witness an amazing leap forward in vehicle technologies, delivering fuel efficiency that will save us money and protect the environment.”