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FACTBOX-Germany agrees measures to cut diesel pollution

Aug 2 (Reuters) - German ministers, regional politicians and car executives agreed a package of measures on Wednesday aimed at cutting inner-city air pollution and averting bans on diesel cars.

Following are some of the key points of the agreement:

ENGINE SOFTWARE

German carmakers commit to update engine management software so that emissions filtering systems can be programmed to operate more effectively. The move will affect 5.3 million cars at a cost of around 500 million euros ($595 million), with the measures to be funded solely by industry. That includes 2.5 million VW cars that have already been recalled for software updates. The government said the software changes would cut the nitrogen oxide emissions of the affected cars by 30 percent by the end of 2018.

However, environmental group DUH and a Stuttgart regional court have dismissed software updates as being inadequate solutions for tackling pollution. DUH on Wednesday called the agreement "a grandiose failure", and said it would reduce nitrogen oxide missions by only 2 to 3 percent overall, since it affected less than 20 percent of Germany's 15 million diesel cars. The group said it would continue lawsuits in 16 cities.

Environment minister Barbara Hendricks, from the centre-left SPD, said voluntary software updates can only be a first step, with a more thorough technical update of cars needed to avoid bans in the longer run.

HARDWARE UPGRADES

The government will continue discussions with carmakers on the possible need for more fundamental retrofits - including the addition of extra exhaust cleaning systems. Such measures are much more expensive than software updates - with the potential costs estimated by analysts as high as 10 billion euros.

SCRAPPAGE INCENTIVES

Auto makers also agreed to offer a range of their own self-funding incentives to encourage drivers to trade in diesel cars aged 10 years or older, and switch to newer, cleaner models. That marked a rejection of calls for state subsidies by some state government officials.

On Tuesday, Ford announced it will pay owners of older vehicles designed to meet the Euro-1, Euro-2 or Euro-3 emission standards a bonus between 2,000 euros and 8,000 euros if they trade in their old cars and buy a new model by the end of 2017.

BMW said it would pay up to 2,000 euros, and Daimler promised a four-digit euro sum. VW said it would release details about its incentive in the coming days.

TOUGHER TESTING

Germany's KBA vehicle certification authority, which has faced criticism it is not sufficiently independent, will tighten controls of emissions, introducing spot tests of vehicles that have already been approved. The measures were announced when the transport ministry published a report on VW last month.

The agreement does not include a proposal to divide control of certification and emissions testing on the streets, which had been sought by the environment minister.

DIESEL FUND

The auto sector and the government will each contribute half to a 500 million euro fund aimed at helping local governments reduce pollution, including introducing systems to improve traffic flows and improve public transport.

SUBSIDIES

Support for electric buses increased to 100 million euros a year, plus extra backing for hybrid and natural gas buses. Financial incentives to help municipalities and taxi operators fund a switch to electric vehicles.

Goal for next legislative period to create a nationwide network of 50,000 charging points for electric vehicles as well as changes planned to property law to make it easier to install charging points in private buildings.

Support for trains powered by hydrogen and fuel cells as well as more cash for cycle paths.

($1 = 0.8523 euros) (Reporting by Edward Taylor, Gernot Heller and Andrea Shalal; Editing by Keith Weir and David Evans)