By Chris Mason
BBC News, Brussels
Emissions have to be cut by nearly 20% over the next six years
Carmakers based in Britain will have to cut emissions from new vehicles by almost a fifth by 2014, under a new deal agreed in Brussels.
The compromise - which has not pleased everyone - has come after a long battle between environmentalists wanting tough targets and an industry facing tough times.
"This deal represents a balance between the needs of the environment and the car industry across Europe, which is suffering massively at the moment," Conservative MEP Martin Callanan told the BBC.
Mr Callanan, who represents the north east of England, played a leading role in the negotiations. He is confident the agreement can encourage car makers to invest in clean technology, without driving them out of business.
"Nissan employs thousands of people in Sunderland, the components supply industry employs thousands in the north east as well," he said.
"In fact something like 50% of the entire manufacturing output of the north east of England is dependent on Nissan and associated industries.
"So you can be assured as a local politician I am not going to do anything to damage the competitiveness of that company and drive my constituents out of work."
Mr Callanan is also pleased special clauses in the legislation have been included to attempt to protect niche manufacturers such as Jaguar Land Rover.
Just last week 850 agency staff working for the firm in the West Midlands were told they would lose their jobs.
The Nissan factory in Sunderland is a major employer in the North East
Those working in IT and engineering at plants in Castle Bromwich, Solihull, Gaydon and Whitley will be out of work by Christmas.
It is hoped the clause will ensure that the emissions reductions Jaguar Land Rover will have to achieve will not cripple the business.
LTI, the firm which makes the iconic black London taxis, will now be excluded entirely from the deal.
Labour MEP Linda McAvan - who represents Yorkshire and the Humber - is equally conscious that many small businesses in her patch, particularly in Sheffield and South Yorkshire, are dependent on the car industry.
But she said: "Green technology can be part of the solution - to both the environmental and economic problems. More fuel efficient cars will be cheaper to run - and so more appealing to customers."
But critics are concerned the compromise deal agreed upon has been watered down to such an extent it is worthless. And that in itself highlights the central issue for negotiators.
Officials in Brussels want the European Union to be seen as the world leader in facing up to the problems associated with climate change.
But that aspiration faces a doubled edged challenge: a big European car industry, facing a big economic downturn.
Take Germany, a country with an enormous, world-leading car manufacturing sector that employs about 20% of its total workforce.
Despite job cuts, car production remains an important UK industry
As the slowdown begins to bite, orders for new cars are falling dramatically - and so, some argue, are voters' desires to be green.
But those pushing for more stringent emissions cuts say it is precisely the job of the European Union to ensure significant change actually happens.
Chris Davies, a Liberal Democrat MEP for the north west of England, says the deal finally agreed is "totally lacking in ambition," adding "the legislation will see European car manufacturers overtaken by Japanese and American rivals in terms of environmental innovation."
Greenpeace is even less forgiving in its rhetoric. "The car industry has been driving negotiations all along and European Union politicians have been happy to sit in the passenger seat making comments about the scenery," said Franziska Achterberg, the pressure group's EU transport policy campaigner.
That reaction gives you some sense of just how controversial these measures are.
Fears of environmental meltdown tomorrow, running into the reality of what many claim to be economic meltdown now.
The plan still has to be passed by all MEPs in the European Parliament next week - and there may yet be some surprises.