European carmakers must cut carbon dioxide (CO2) emissions by 18% before 2015, in a compromise deal agreed with the European Commission.
Under the agreement, which will be phased in between 2012 and 2015, CO2 emissions from new cars must be cut to no more than 130 grams per kilometre. Car makers who miss the targets will be fined up to ?95 (£82) per gram.
The commission had previously wanted the full emissions cut by 2012. But Germany, France, Britain and Italy have fought to delay the reductions, arguing that car makers were integral to the health of the countries' struggling economies.
The commission accepted the compromise under the provision that manufacturers would have to meet tougher targets after the phase-in period. By 2020, emissions must be cut to just 95 grams per kilometre.
"This deal represents a balance between the needs of the environment and the car industry across Europe, which is suffering massively at the moment," British Conservative MEP Martin Callanan told Reuters.
However, Liberal Chris Davies said that the deal was a "huge disappointment".
"Tough carbon curbs would have led to lower driving costs, but the consumer seems to have been largely forgotten," he said.
Last week, a report for the Campaign for Better Transport claimed that more ambitious Government policies could cut the emissions from all transport by 26% by the year 2020.
