The US should adopt the toughest possible fuel economy standards for motor vehicles and join a global framework for managing carbon dioxide emissions, according to a Bush administration-commissioned study of the energy industry, led by the former chairman of ExxonMobil.

The recommendations come in a report from the National Petroleum Council, the industry advisory body to the administration, entitled “Facing the Hard Truths about Energy”.

A draft of the report, seen by the Financial Times, makes five main recommendations for US energy policy, including slowing demand growth by increasing efficiency, expanding sources such as coal and nuclear power, and developing a legal framework for capturing and storing CO2 emissions.

The NPC was called on by the administration in 2005 to review the outlook for America’s oil and gas supplies.

The 21-month inquiry, chaired by Lee Raymond, the former chairman of Exxon, is the most comprehensive study of the industry for decades. It had 350 participants, including oil and gas companies, banks, vehicle manufacturers, consultancies and non-governmental organisations. The report will be voted on by the NPC at a meeting in Washington on Wednesday morning, and will be presented to Samuel Bodman, the energy secretary.

The conclusion in the draft report is that “the world is not running out of energy resources, but there are accumulating risks to continuing expansion of oil and natural gas production from the conventional sources relied upon historically”. These risks, it says, “create significant challenges to meeting projected energy demand”.

Among those risks are the difficulties faced by western companies in gaining access to oil and gas in resource-rich countries, and the problems presented by technically complex projects such as offshore production in deep water.

The Paris-based International Energy Agency cited these and similar issues last week, when it warned of the risk of an oil supply “crunch” within five years.

The NPC report argues that to avert the threat of oil and gas supplies failing to meet demand, the US needs to act urgently and in a sustained way to improve its energy efficiency and the diversity of its energy supplies.

That includes cutting energy use in the home and industry as well as motor vehicles, and increasing the use of coal, nuclear power, biofuels and other renewables, and “unconventional” oil and gas from sources such as Canada’s oil sands.

The report also recommends “an effective global framework for carbon management incorporating all major emitters of CO2” and a US mechanism for setting an effective cost of CO2 emissions.

This could include regulation, emissions trading schemes or a carbon tax.

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