European car makers demand cash for hitting CO2 targets

European car companies are lobbying governments for financial support to meet new CO2 emissions legislation laid down this week.

After months of being pressured by car makers to water down CO2 targets, the European Parliament announced that new car fleets will have to cut emissions to 120g CO2/km by 2015 from an average of 160g CO2/km today.

Car makers say they need financial support from governments to help them with the combination of the CO2 regulations and an economic slowdown that saw European car sales in November down by a quarter on 2007 figures.

"This legislation forms part of the ambitious European energy and climate change package," said Christian Streiff, president of the European Automobile Manufacturers Association (ACEA). "We are committed to doing what we can to deliver, despite the sudden, dramatic economic downturn that severely limits our resources. We ask for governments to support the strategic auto sector in these extraordinary circumstances."

Ivan Hodac, secretary general at the ACEA, called for €40 billion (£37.6bn) in low-interest loans.

The UK trade association for car makers, the SMMT, echoed the need for support. "The sector has already made significant progress in improving the environmental impact of its products and this legislation places an even greater premium on innovation, skills and training to meet these commitments. At a time of economic uncertainty, it underlines the importance of long-term investment in the sector," said chief executive Paul Everitt.

Under the new European Parliament plan, which still needs to be legislated by the European Council, car companies will be fined if they miss their CO2 targets. The targets will be phased in between 2012 and 2015, with 65 per cent of cars needing to meet the target by 2012, followed by 75 per cent in 2013, 80 per cent in 2014 and 100 per cent in 2015.

The EU's ultimate goal is for average new car fleets to emit just 95g CO2/km by 2020, even lower than the 99g CO2/km emitted by one of today's lowest-carbon cars, the VW Bluemotion Polo.