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The European Union has proposed that carmakers must reduce emissions of new vehicles by 18 per cent within the next six years.
The new deal has a deadline set three years later than the one provisionally set by the European Commission.
Carmakers will have to phase in the scheme, which cuts emissions from new cars to 130 g/km between 2012 and 2015.
The compromise includes the long-term goal of cutting emissions to 95 g/km by 2020, depending on a mid-term review.
Smaller manufacturers such as Jaguar Land Rover have been granted special allowances in the deal and penalties for carmakers that narrowly miss targets were reduced from the original fees proposed.
The deal decided upon is provisional and must be approved by the European Parliament and all 27 European Union nations before becoming a law, but the plan is not expected to change significantly.