The European Commission proposed on Wednesday to make at least five billion euros (US$6.5 billion) available to help the troubled auto industry develop green cars.

In its European green cars initiative, the Commission said the funding will come from the European Union (EU), the European Investment Bank (EIB), industry and member states.

The proposal was part of a 200-billion-euro (260-billion-dollar) plan announced by the Commission on Wednesday to stimulate a sluggish EU economy.

"What we have to do for the car industry is to help it transform into a more modern industry, more friendly to the environment, and in fact adapting it to the new trends in overall demand," Commission President Jose Manuel Barroso told a press conference when he unveiled the plan.

Under the initiative, the EIB would provide cost-based loans to car producers and suppliers to finance innovation, in particular in technologies designed to improve safety and environmental performance, e.g. electric vehicles.

Demand-side measures such as a reduction by EU member states of their registration and circulation taxes for lower emission cars, as well as efforts to scrap old cars, should be integrated into the initiative.

In addition, the Commission will support the development of a procurement network of regional and local authorities to pool demand for clean buses and other vehicles.

Due to the worsening economic situation, the European auto industry has run into difficulties, with new car sales down by 14.5 percent in October, the sixth consecutive monthly fall.

After the U.S. government approved an aid package worth 25 billion U.S. dollars in September to help the American auto industry invest in clean technology, European car makers are also demanding 40 billion euros (US$52 billion) at attractive rates from the EU to help develop greener cars.

Within the EU, both Germany and France are looking for a plan to support their car industries.

(Xinhua News Agency November 27, 2008)