BRUSSELS (Reuters) - The European Commission published plans on Wednesday to tighten limits on how much carbon dioxide new cars can emit, drawing warnings that it could inflict damage on an already fragile automobile industry.
The proposals, which the Commission says can shave billions of euros off the EU fuel bill and cut greenhouse gas emissions by millions of tonnes, retain much of the detail of a draft seen by Reuters last month.
However, after lobbying from the car industry, they allow limited flexibility on how a binding 2020 target to limit CO2 to an average of 95 grams per kilometer (g/km) for cars and 147 g/km for vans should be implemented. The existing legislation sets a binding 2015 limit for cars of 130 g/km, with a target of 175 g/km for vans by 2017.
EU Climate Commissioner Connie Hedegaard told reporters the proposed regulation was "fair and balanced" and that loopholes had been narrowed.
"With our proposals, we are not only protecting the climate and saving consumers money, we are also boosting innovation and competitiveness in the European automotive industry. And we will create a substantial number of jobs as a result," she said.
The European Automobile Manufacturers' Association (ACEA) described the targets as "extremely challenging".
"This will increase manufacturing costs in Europe, creating a competitive disadvantage for the region and further slowing the renewal of the fleet," ACEA Secretary-General Ivan Hodac said in a statement.
Philippe Doublet, a vice-president at Renault, said there would be an additional manufacturing cost, but told a Brussels meeting on Tuesday that the 95 g/km limit for cars was achievable.
It is unclear how much of any extra cost can be passed on to customers in a difficult economic climate without depressing car sales further.
Monique Goyens, director general of the European consumer organization BEUC, welcomed the proposals. "This is a double win," she told reporters. "You save fuel costs and you are able to contribute on the environmental front."
BEUC has estimated the increased manufacturing cost at around 1,000 euros, while the International Council on Clean Transportation puts the cost of improved fuel efficiency technology at around 800-900 euros per car.
Environmental groups said the plans marked progress but lacked ambition. They argue that 80 g/km can be met with existing technology.
In addition, they criticized the decision to retain a certain amount of "super credits", which enable car makers to offset gas-guzzling vehicles with extremely low-emitting vehicles. The use of super credits under the proposed new law is less, however, than under existing legislation.
Green member of the European Parliament Rebecca Harms said that the Commission proposal was a missed opportunity.
"Not only has the commission failed to argue for more ambitious limits -- in spite of this being technically possible and in the interest of consumers -- it has also not sought to close some of the loopholes," she said in a statement.
Targets so far have helped to curb rising emissions from the transport sector. EU body the European Environment Agency has issued preliminary figures showing the average CO2 emissions of cars registered in the EU in 2011 was 135.7 g/km, 4.6 g/km less than in 2010.
A Commission statement said that each new car would save its owner an average of about 340 euros ($420) a year in fuel costs and an estimated total of 2,904 to 3,836 euros over a car's lifetime (13 years).
Overall, consumers will save about 30 billion euros a year in fuel costs and it is estimated that the targets could increase EU gross domestic product by 12 billion euros a year.
They would also save 160 million metric tonnes (176.37 million tons) of oil -- worth about 70 billion euros at today's prices -- and around 420 million tonnes of CO2 by 2030.
The new proposal must go through a long negotiation process between EU governments and the European Parliament before it can become law.
Lobbying is likely to continue. So far, it has focused on technical details that determine how much of the burden the makers of big, heavy cars, versus lighter vehicles, will have to carry.
Hedegaard said that under the proposal all manufacturers would have to make the same relative effort to achieve the average of 95 g/km across the EU fleet.
There is more to come. Hedegaard said the Commission would start work on targets for after 2020, which could involve introducing new methodology. A Commission position paper is expected this year.
Editing by David Goodman, Bernard Orr