By 2020, the average emissions from new cars will have to be no more than 95g of carbon dioxide per kilometre driven, a cut of more than 40g from today's levels and of 35g/km compared with the 2015 target, if the proposed new regulations are accepted.
Connie Hedegaard, climate chief of the European commission, said the goals were "ambitious but achievable" and would benefit consumers, through fuel cost savings, and help the EU's car-making industry compete with overseas manufacturers.
She said: "What we are proposing is a fair and balanced regulation."
The proposals will now have to be accepted by member states and the European parliament, if they are to come into force. That process could be tricky as car companies are continuing to lobby politicians on the goals.
According to the EU's estimates, as a result of the new goals the average driver of a new car in 2020 would save about €340 in the first year on fuel costs, and between about €2,900 and €3,800 over the car's average 13-year lifetime, compared with the 2015 target. This would equate to total savings of about €30bn a year in fuel costs, which could increase EU GDP by €12bn a year and create new jobs, as well as saving about 160m tonnes of imported oil.
But car manufacturers have been lobbying heavily against the proposals in the corridors of Brussels, arguing that the strict targets would incur high costs in research and development and in adapting production lines.
Hedegaard dismissed these claims, pointing out that car companies made the same protests before the proposals for the 2015 targets. Yet manufacturers have now almost met the 2015 targets, years ahead of time. "Look back at all the terrible things that [they said] would happen, then go and see what the manufacturers are doing – this is where the innovation curve took off," she said.
Targets provided a spur to growth, Hedegaard said. "Anyone buying a car notices it is more fuel efficient than a few years back – this did not happen automatically, but [as a result of] targets," she said.
There was also clear popular demand for more fuel-efficient models, she said: "[European] citizens would like cheaper cars."
Green campaigners also attacked the proposals as too weak. Greenpeace pointed out that instead of calculating average fleet emissions by adding the emissions of each car and dividing by the number of cars made, manufacturers would be allowed to continue making big and heavy cars with high emissions, while offsetting this through making a smaller number of more efficient cars. This, the pressure group argued, would mean manufacturers could continue to sell inefficient cars and the actual carbon savings would be less than intended.
Franziska Achterberg, transport policy director for Greenpeace in the EU, said: "These proposed efficiency standards bear the fingerprints of the car lobby. It is a timid opening move by the commission ahead of tough negotiations with the European parliament and EU governments. There is a lot to be gained from strong efficiency targets, both for drivers and the climate."
Emissions from vans will have to be cut to 147g/km in 2020, compared with 181.4g in 2010, with an interim target of 175g from 2017. Greenpeace said this was also inadequate.
Greg Archer, programme manager for clean vehicles at Transport and Environment, a Brussels green group, said: "Fuel economy standards are good for jobs and the European economy, good for drivers and good for the planet. This is a sound proposal, but the benefits could have been even greater had the commission shown more ambition."
The group said that a 2020 target of 80g/km was feasible, and would save drivers about €650 a year, and that a further 2025 target of 60g/km should also have been set.
Hedegaard said the commission was now working on potential post-2020 targets.