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EU closer to deal on CO2 emissions for cars

European Union governments moved closer towards a deal on cutting greenhouse gas emissions from cars, but failed to agree on details ahead of key negotiations with the bloc's parliament, diplomats said.

The planned legislation must strike the right balance between the needs of the car industry hit hard by a global economic slowdown and the bloc's commitment to fight global warming caused greenhouse emissions.

The lack of full agreement means the governments and the European Parliament were unlikely to clinch a final deal on car emissions during subsequent negotiations on Monday night. But a keenly awaited accord could still come later this week.

“The Council (EU governments' envoys) agreed on political principles..., not all details. The meeting with parliament will be exploratory,” one EU diplomat said, adding the governments would probably debate the issue again on Wednesday.

On Monday, ambassadors of the EU's 27 governments agreed to cut average carbon dioxide emissions from new cars by around 18% to 130 grams per kilometer, starting from 2012 for part of automakers' output and with full compliance by 2015.

“There was agreement on a phased-in approach towards cutting CO2 emissions. But some countries wanted a higher initial level and others a lower initial level,” the diplomat said.

Crucially, however, EU envoys failed to agree on fines for companies exceeding the allowed emissions. Any deal needs to be backed by the parliament before becoming law.

Another diplomat said the majority of countries backed a French proposal on cutting CO2 emissions to 130 g/km in 2012 for 65% of each producer's fleet, then for 75% in 2013 and 100% in 2015.

The compromise is to accommodate luxury car makers such as Mercedes and BMW, which generally produce big cars with high C02 emissions.

The governments also agreed in principle on an ambitious goal to slash CO2 emissions from cars to 95 grams per kilometer by 2020. This is to placate the European Parliament, where most legislators back stricter emission cuts.

The diplomat said some small car makers might be temporarily exempted from general rules under the deal.

The legislature's environment committee has supported strict emissions cuts, but it remains unclear if the whole house would back the proposal in a final vote, especially as car makers are announcing production stops and lay-offs due to recession. (Reuters)