As promised, here's the latest news on the cars loan:

Christmas has come early for the automotive industry, after the European Commission pledged to deliver a generous rescue package of €5 billion in 2009 despite the industry’s resistance to legislation to reduce car CO2 emissions.

The rescue package proposed by Commission President José Manuel Barroso includes a €4 billion low interest loan from the European Investment Bank (EIB) and is part of direct financial support by the EU and the EIB for the European economy of €30 billion.

“Governments must realise that carmakers can’t have jam on both sides. The parallel debates over car standard and loans raise doubts whether EU governments are serious about greening cars. They are offering carrots but refrain from using sticks,” said Franziska Achterberg, Greenpeace EU transport policy campaigner.

“The car industry is getting a gift despite the fact that they’ve been fighting tooth-and-nail against legislation to reduce CO2 emissions from cars.”

The rescue package follows a request by the European Automobile Manufacturers Association in October calling on the EU to deliver €40 billion in financial support. It also comes on the back of a call by three leading US carmakers for a $25 billion bailout.

Greenpeace calls on EU governments to refuse handing out loans as long as they are not certain that green cars are being put on the market. Between 1996 and 2005, 31% of the EIB’s entire industry funding went to the car industry. In Greenpeace’s view, this public money has been wasted, as there has been hardly any progress to make cars more fuel-efficient.

The three European institutions are currently putting the final touches on a new EU law to limit CO2 emissions from cars. Based on current proposals, this legislation will not lead to any reductions by 2012. The Commission‘s original proposal, supported by the European Parliament, asks for a target of 130 grams of CO2 per kilometre by 2012. Agreements on the car emissions legislation and the Commission’s rescue package are expected ahead of the Environment Council and at the EU Summit early next month.