BELGIUM: November 3, 2008


BRUSSELS - Italy stood by small car makers like Fiat on Friday, refusing to join France, Germany and Britain in a deal to cut carbon dioxide emissions.


EU ambassadors agreed to phase in emission curbs to 2015, cementing a deal agreed by France and Germany in June, and they can now enter negotiations with the European Parliament to reach a final deal this year.

But there was no agreement on how much to fine automakers that fail to comply, after Rome fought hard for Italian manufacturers.

"We don't think we're very far away from an agreement, but we're not yet at a point that we can accept their offer -- it doesn't yet close the gap," said an Italian government source.

Italy made clear this month it would only give its backing to the EU's overall plan to fight climate change if it was happy with the deal on cars, sparking fears the EU's ambitious goals were in jeopardy.

But most other EU nations, including major carmakers France, Germany and Britain, committed to the compromise, allowing the bloc's French presidency to start negotiations with parliament.

"They've concluded there's sufficient agreement among the 27 member states," said a European diplomat.

The European Union executive has proposed cutting carbon dioxide output from cars by 18 percent to 130 grams per km by 2012 as part of an ambitious plan to lead the world in fighting climate change, with stiff fines for offenders.

The EU executive hopes a further 10 grams will be removed through better tyres, fuels and air-conditioning.

Member states have agreed a watered down version of that plan, taking account of car manufacturers' pleas for more time and more flexibility in how they achieve the goals.


JAGUAR

France and Germany reached a common position in June, but Italy has been fighting for its small low-polluting cars, while Britain has sought to protect niche manufacturers like Aston Martin or low-volume producers like Jaguar.

"We are confident our three key objectives have been taken on board -- niche manufacturers, low-volume producers and a long-term target," a British diplomat said on Friday. "We will want to make sure these remain after talks with parliament."

Italy is unhappy that smaller cars have been set more ambitious targets than bigger cars. Fiat, for example, might have to cut to 122 grams, while BMW would have to cut to just 137 grams.

France has proposed a graded system of fines, which go easy on auto makers that narrowly miss their targets -- and a draft document seen by Reuters on Friday showed it had ceded to Italian demands those fines be lowered further, especially for smaller cars.

"We see with interest the direction they're taking by treating cars differently if their emissions are under 130 grams," said the Italian government source. "This is a step in the right direction."

The agreement will still face the hurdle of winning approval in coming weeks from the European Parliament, which has so far called for deeper cuts than member states want.

And the Dutch government is still calling for deeper cuts and a swifter phase-in.

Greenpeace campaigner Franziska Achterberg said EU governments had made too many concessions to an industry that was reluctant to modernise in the face of global warming.

"Christmas is coming early for carmakers this year," she said. "Over the past couple of days, European governments have signalled that they would not only allow carmakers to continue business-as-usual in the face of climate change, but also reward their irresponsibility with a 40 billion euros ($51.11 billion) loan package."

(Reporting by Pete Harrison, editing by Anthony Barker)


Story by Pete Harrison


REUTERS NEWS SERVICE