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EU Agrees Steep Fines to Cut Car Emissions

The European Commission agreed on proposed legislation on Wednesday to force down emissions of carbon dioxide (CO2) from cars with steeply rising fines on manufacturers that fail to comply, an EU source said.

The European Union executive set a four-year phase-in period for fines on manufacturers whose fleets exceed an average of 120 grams per km of the main greenhouse gas blamed for global warming from 2012.

Fines on companies for non-compliance will start at 20 euros ($28.80) for each excess gram per kilometre in 2012 on average over the whole fleet, and rise to 95 euros g/km in 2016, the source said.

Of the overall mandatory target, an average of 130 g/km must be achieved from improved engine technology and the rest through biofuels and more efficient gears, tyres and air-conditioning.

The decision came after a showdown between industrial and environmental champions in the European Union executive over how to fight climate change without harming European carmakers.

In a first reaction, a spokeswoman for the European Automobile Manufacturers Association, Sigrid de Vries, called the fines "unprecedented" and said industry wanted a realistic system with objectives it could meet.

"If there are penalties, they have to be reasonable with a clear link to the price of CO2 applied to other sectors," she said.

Vice President for Enterprise Guenter Verheugen, an ardent defender of Germany's makers of heavier luxury cars, had sought lower fines and more flexibility on how companies achieve the cuts.

Environment Commissioner Stavros Dimas, a Greek, argued for heavy fines as an effective deterrent to force manufacturers to invest in clean technology and produce lighter cars to meet the EU standards.

The two men have been at loggerheads since the EU executive set the headline goal last January of reducing car emissions to 120 gram/km by 2012, with the additional 10 grams coming from biofuels and measures to promote more fuel-efficient driving.

The Commission decision was not the last word on the issue. Member states and the European Parliament must back the legislation.

German producers such as BMW and Mercedes-Benz make heavier vehicles and their emissions are rising while France's Peugeot and Renault as well as Fiat of Italy make lighter cars whose emissions are falling.

Carmakers will be able to team up and pool their CO2 emissions to meet the EU targets. This effectively means makers of heavier cars will be able to buy emissions credits from manufacturers whose fleet is below the limit.

The EU source said the burden of making emissions cuts would be shared more or less evenly between makers of heavy and light cars.

Environmental campaigners say the 27-nation EU's role as a world leader in the fight against global warming is on the line.

"The EU's credibility on climate change is at stake. It must rise to the challenge and not back down in the face of self-interested lobbying from the car industry," Tony Bosworth of Friends of the Earth said in a statement on Wednesday.

Carmakers Slam EU CO2 Plan

The head of a pan-European carmakers association slammed a plan by the European Commission to cut carbon dioxide emissions from cars, saying it was unbalanced and level of fines was "totally unacceptable."

"We are extremely disappointed with the process and disappointed with the content," Ivan Hodac, secretary-general of the European Automobile Manufacturers Association (ACEA) told Reuters shortly after the plan was announced on Wednesday.

"But we going to work with the Council (of EU governments) and the European Parliament to make sure the final outcome is much more balanced."