SACRAMENTO, Calif. — Insurance Commissioner Steve Poizner wants to make pay-as-you-drive coverage available to California motorists as an insurance option that he says will encourage people to drive less and help reduce greenhouse gases.

"I am thrilled to pave the way for California drivers to obtain insurance that is more environmentally friendly and more accurately reflects driving habits," said Poizner of the proposal he describes as a green auto insurance option. "As a strong advocate of healthy market competition and a healthy environment, I am especially pleased to encourage this kind of innovation and additional options for consumers."

Car insurance regulations currently require rates to be based on estimated annual mileage. Poizner has proposed changes in the regulations that would permit insurers to offer pay-as-you-drive coverage as an option. The new regulations would also permit consumers to verify their mileage using odometer readings, car repair records or by using a device, as long as it is not one that allows insurers to track drivers' whereabouts and driving habits.

Poizner said GPS is not appropriate for pay-as-you-drive insurance because of privacy and public policy reasons. The prohibition and Poizner's declaration represent an attempt to head off public criticism that surged around legislation enabling an auto insurance discount using verification methods that would have allowed insurers to track motorists' locations and other driving-related data.

Assemblyman Jared Huffman, D-San Rafael, withdrew his bill, which had been approved by the Assembly and the Senate Insurance Committee, in view of Poizner's proposed changes in regulations.

According to the California Department of Insurance, the Environmental Defense Fund estimates that if 30 percent of the state's drivers opt for the voluntary pay-as-you-drive coverage, the state could avoid 55 million tons of carbon dioxide between 2009 and 2020 -- the equivalent of taking 10 million cars off the road. In addition, an estimated 5.5 billion gallons of gas and $40 billion dollars in car-related expenses would be saved.

In a study released in July, the Brookings Institution said that if U.S. drivers paid for accident insurance based on their mileage, driving would decline 8 percent nationwide, CO2 emissions would drop 2 percent and oil consumption would fall by 4 percent. The study also said that two-thirds of U.S. households would pay less for car insurance and each household would save about $270 per car. Thirty-four states have a version of pay-as-you-drive insurance options available, the study said.

The California Air Resources Board has endorsed the pay-as-you-drive proposal, Poizner's department said. Public comment is being taken on the regulations and after the process is complete, the new rules will take effect — probably no later than fall 2009, the department said.