EU faces showdown over car CO2 emissions

By Paul Taylor

BRUSSELS (Reuters) - The European Commission faces a showdown between industrial and environmental champions on Wednesday over how to cut emissions of carbon dioxide from cars to fight climate change without harming European carmakers.

At a meeting of senior EU officials on Tuesday night, supporters of Germany's heavy luxury car manufacturers won a longer phasing in period for fines on manufacturers who fail to meet mandatory limits on exhaust emissions of the main greenhouse gas blamed for global warming, EU sources said.

Vice-President for Enterprise Guenter Verheugen, an ardent defender of the German car industry, also sought to reduce the level of fines on companies that do not cut average car emissions to 130 grams per km through engine technology.

Environment Commission Stavros Dimas, a Greek, argued for gradually mounting fines from 2012 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.

They are due to appear side-by-side on Wednesday to announce how the Commission proposes implementing the targets, notably the burden-sharing between large and small cars and the scale of fines on those who exceed the limits.

Even if they agree, it will not be the last word. Member states and the European Parliament must back the legislation.

CREDIBILITY AT STAKE

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

Commission President Jose Manuel Barroso summoned the two commissioners to a meeting on Tuesday to try to reconcile their divergent positions but differences persisted, the sources said.

On Tuesday night, Commission officials agreed that the fines would be phased in over more than the three years originally planned from 2012, but the level is still in dispute.

Pleading for more time, Sigrid de Vries of the European Automobile Manufacturers Association, said: "Industry is not against legislation but it wants this rigid system to be made a bit more flexible to cope with production cycles and market developments."

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

Germany had argued for an 80 percent so-called slope curve, putting most of the onus on makers of smaller cars. France had demanded a 25 percent level that would have targeted "gas guzzlers." The source said the outcome would be in the middle.

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