An agreement announced yesterday could save drivers money by lowering insurance costs for vehicles that are driven less -- and could reduce auto emissions, help rein in urban sprawl, and cut roadway pollution runoff into wildlife habitats, lakes, and streams.

The U.S. Environmental Protection Agency and Ohio-based Progressive Insurance said the program, under the EPA's Project XL, would assess whether providing economic incentives for driving less would yield environmental benefits.

In the study, recording devices installed in test vehicles will provide Progressive Insurance aggregate data on participants’ driving habits. Drivers would win insurance discounts by driving less, both overall and during peak periods. The EPA and the Department of Transportation will study how much environmental improvement results from the reduced insurance cost incentive.

The agreement calls for the EPA to consider incentives such as State Implementation Plan credits for states that enable this new pricing system to be offered, if the study determines that the innovative approach results in reduced driving and less auto pollution.

Project XL, which stands for eXcellence and Leadership, is a pilot program that allows state and local governments, businesses and federal facilities to develop with the EPA innovative strategies to test better or more cost-effective ways of achieving environmental and public health protection. In exchange, the EPA will issue regulatory, program, policy, or procedural flexibilities to conduct the experiment.