All advertising for new cars will have to carry cigarette-style “health warnings” about their environmental impact, under a European plan to force manufacturers to reduce carbon dioxide emissions.

Companies that produce the most polluting cars will also have to pay penalties of up to £5,000 per vehicle, with the proceeds used to reduce the cost of the most efficient cars.Advertisements in newspapers and magazines, will have to devote at least 20 per cent of the space to details about fuel economy and CO2 emissions. At the moment manufacturers have to include only basic mpg and CO2 figures in the small print. They do not have to explain what the numbers mean or provide any comparison.

Car advertisements will have to carry colour-coded emissions labels such as those already displayed on new fridges and washing machines, with bands ranging from dark green to red. The plan, expected to be approved by the European Parliament on Wednesday, has been drawn up in response to the car industry’s failure to meet its own voluntary target on reducing CO2 emissions.

The industry agreed in 1998 that the 18 million new cars expected to be sold in Europe in 2008 should emit an average of no more than 140g of CO2 per kilometre. The average last year was 160g/km and emissions fell only 0.2 per cent on the previous year, the lowest reduction on record. Privately manufacturers admit that they have no hope of meeting the target.

A fifth of the European Union’s CO2 emissions come from cars and road transport accounts for 60 per cent of all the oil used by member states.

Chris Davies, the Liberal Democrat MEP for the North West of England, who was appointed by the European Parliament to draw up the plan, said that the car industry had grossly exaggerated the cost of making cars more efficient to avoid taking action.

He said that the German car industry had been particularly obstructive because it was dominated by manufacturers such as Mercedes and BMW, which specialised in larger, more polluting cars.Mr Davies has agreed a compromise, which he expects to be supported by the majority of MEPs, under which manufacturers would be given until 2015 to achieve an average of 125g/km for new cars. He said: “I accept it takes seven years from the design stage to vehicles rolling off the production line. But the new target would be made wiggle-proof and manufacturers who failed to achieve it would pay penalties.”

He predicted that some companies would prefer to pay the penalty rather than reduce emissions because they would not want to reduce the power or weight of their cars.He said that the proceeds would be used to reward companies that beat their emissions targets and a grant system to encourage people to trade in their cars for more efficient new ones.

The Society of Motor Manufacturers and Traders opposes the idea of giving more space to environmental information. A spokesman said the basic details were already in advertisements: “There’s no point in giving this sop to the environmental lobby because most people will ignore it.”

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