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UPDATE 2-EU plans credit system, fines to push low-emission car production

* EU sets 30 pct reduction CO2 target for cars by 2030

* 95 euros for every gram of CO2 above the limit

* EU worried China, U.S. surpassing its car industry

* Plans mirror moves in low emission leader California (Updates with package published, quotes, details)

BRUSSELS, Nov 8 (Reuters) - The European Union proposed tougher car emissions targets on Wednesday including a credit system for carmakers to encourage production of electric vehicles and fines for exceeding carbon dioxide limits.

The EU executives' proposal aims to curb greenhouse gases from transport as part of the bloc's push to cut emissions by at least 40 percent below 1990 levels by 2030.

But it has already met with opposition from nations with big automotive sectors, such as Germany.

The European Commission is keen for legislation to stimulate European industry to develop electric vehicles, afraid that it is falling behind China, Japan and the United States.

"The competition is here," Commission Vice President Maros Sefcovic said, citing the use of Chinese electric cars by Brussels taxis firms. "The car was invented in Europe and I believe it should be reinvented here."

The proposal calls for reduction of 30 percent of average CO2 emissions by 2030 from carmakers' fleets compared with 2021 levels. It also sets an interim of a 15 percent reduction by 2025 to help ensure automakers kick start investment early.

If they are found in breach of new rules, carmakers face potential fines in the millions of euros, with penalties set at 95 euros for every gram of CO2 above the limit and for each new vehicle registered in that year.

The draft bill would allow carmakers to offset their overall target if the share of zero and low-emission vehicles in their fleet surpasses a benchmark set by regulators.

The bar for low-emissions vehicles is set at 50 grams per kilometre - ruling out most hybrid vehicles.

Unlike California's system - viewed by many in the sector as the leading laboratory for policy on electric cars - EU regulators shied away from quotas.

Heralding tough negotiations with member states and European Parliament before the bill becomes law, companies called the measure too ambitious, while environmental campaigners said it did not go far enough.

German Foreign Minister Sigmar Gabriel told the Commission on Tuesday he was against any toughening of European car emissions targets by 2025, saying stricter rules would cost jobs and growth.

European carmakers have lobbied for the emissions reduction target to be set at 20 percent and have called for compliance to be conditional on consumer uptake of electric cars.

In a nod to manufacturers' concerns, the Commission is set to earmark 800 million euros ($928 million) to support the roll out of charging points for electric vehicles and 200 million euros for battery development.

Despite the push back from industry, outrage over Volkswagen cheating on emission tests in the United States has put pressure on EU regulators to tighten controls, with several European governments and cities announcing bans of petrol-fuelled cars within the next two decades.

"We want the European automotive industry get back in the race for global leadership on clean vehicles," EU climate Commissioner Miguel Arias Canete said.

The Commission also set targets for public authorities to source a percentage of either low emission or zero emission vehicles in their public procurement by 2030, for example garbage trucks. (Reporting by Alissa de Carbonnel; Additional reporting by Julia Fioretti; Editing by Jason Neely and Edmund Blair)