European Union governments are making some progress towards a deal on implementing EU-wide CO2 emissions limits.

It had been hoped that a final deal would have been reached yesterday, but the European Council, which represents the 27 national governments, has failed to reach agreement on the level of penalties.

On Monday night the Council did agree that average CO2 emissions from new cars would be limited to an average of 130g/km by 2012 for some parts of a vehicle manufacturers' annual sales, with full compliance for the whole sales fleet by 2015.

One diplomat told Reuters that 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.

Governments also agreed to a target of 95g/km by 2020.

There are still further opportunities this week for the details on the level of penalties to be agreed. They would then have to be confirmed by the European Parliament.

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