Mumbai: The European Commission has proposed that the average new car in the European Union should limit carbon dioxide (CO2) emissions at 130gm per km by 2012 from 163gm at present.

If the proposals are approved by EU governments, these will be the world's toughest controls on greenhouse gas emissions.

Along with increased use of bio fuels and other technological advances, the emission levels could well be limited to an average 120 gm/km, the EC said.

The EC said the change is essential for meeting EU targets for reducing emissions under the Kyoto protocol to combat climate change. EC had even tougher measures in mind but the proposals had to be watered down following fierce lobbying by carmakers, who said the move will drive up car prices and cost jobs.

The proposals have also created a rift between producers of small cars in Southern Europe and Germany's luxury car-dominated industry. The disagreement could hamper legislation as industry across countries demanding relaxations. Carmakers, in fact, have warned of mass migration of car industry jobs out of Europe.

Tensions have risen among carmakers like France's PSA Peugeot Citroën and Renault, as well as Fiat of Italy complaining that Germany is using its EU presidency to advance its car industry interests. The three produce some of Europe's lowest-emission cars and want luxury car producers like DaimlerChrysler and BMW to share the burden of cutting emissions.

Transport and environment authorities welcomed the proposals while car manufactures were skeptical about the deadline.

"Today's announcement finally recognises, ten years late, that regulation is needed on CO2 emissions just as it is on safety and other forms of air pollution from cars," said Jos Dings, director of environmental group Transport and Environment.

"Although we have not seen the Commission's communication, we share the objective of reducing CO2 emissions from passenger cars. Any new target below 140gm/km, coming so soon after 2009, will represent a very challenging task for carmakers. Therefore, we see this as a responsibility to be shared with all stakeholders," Toyota Motor Europe said in a statement.
"The European ambition, overall we support it..The move to the ecological car of the future is a key pillar of PSA's future," said PSA Peugeot Citroen CEO Christian Streiff.

"By scaling back its proposals on CO2 emissions from cars, the Commission has once again confirmed that the bottom line of the German car industry takes priority over tackling climate change ... At least the proposal has not abandoned the principle of binding limits to hold the industry responsible for its emissions -- the voluntary approach clearly failed to stop the industry from rolling out gas guzzlers," a Renault spokesman said, adding, "The CO2 proposals would cost carmakers on average an extra 3,000 euros per vehicle and it remained to be seen how that extra cost would be borne out."