EU demands CO2 emissions reduced 30 per cent

The European Union (EU) has introduced new proposals that aim to slash the 95g/km fleet average in 2021 to just 66g/km by 2030.

Equivalent to a 30 per cent cut in just nine years, the new target will apply to all manufacturers building cars and vans between 2021-2030. This drive to curb greenhouse gases begun by the European Commission is said to be an attempt to reduce CO2 levels to 1990-levels by 2030.

European legislators warned that those exceeding carbon dioxide limits during the period would face heavy fines.

The EU has also announced it plans to introduce a credit system to reward car makers investing in pure-electric vehicles, as a stimulus package to incentivise the European car industry, and ensure it keeps up with China, Japan and the United States.

Recently, in Belgium, there has been some fury after Brussels taxi firms began using Chinese electric cars to ferry passengers, instead of vehicles sourced from European makers.

Addressing the concerns, European Commission vice president, Maros Sefcovic, said: "The car was invented in Europe and I believe it should be reinvented here."

As well as the large cut by 2030, the EU suggested an interim goal of reducing CO2 by 15 percent by 2025 to help ensure car makers begin investing in further CO2-reducing tech early.

The potential fines for car makers failing to meet the new goals are potentially devastating, with the European Commission fining a car maker €95 ($A145) for every gram above the limit for each car registered in Europe.

And the carrot in all this, the system of credits, will help car makers offset their overall target - but only if the number or percentage share of zero- or low-emission cars meets or exceeds EU-set benchmarks.

Within hours of the EU releasing its proposals, German foreign minister, Sigmar Gabriel, led the voices of stiff opposition within member-state governments and some car makers, complaining stricter emission rules would cost both growth and jobs.

It could have been worse for the car makers though. Some feared the EU was primed to introduce specific quotas. The European Commission will not fine car makers who do not manufacture zero- or low-emission vehicles, as long as the fleet average emissions are not exceeded.

So far, the proposals are only at draft stage. For the bill to become law, member states will have the opportunity to debate the rules in the European Parliament.

The Commission has announced it has set aside more than €800 million ($A1.2 billion) to encourage greater infrastructure for pure-electric vehicles and another $A300 million to fund projects furthering battery development.