EU regulators seek to close car emissions testing loopholes

* Nitrogen oxides a bigger issue than C02

* Vehicles would be tested on roads, not in laboratories

* "Real-world" testing rules to be unveiled by year-end

By Barbara Lewis

BRUSSELS, Aug 20 (Reuters) - EU regulators are preparing draft legislation that will require vehicle fuel use to be tested on roads rather than in laboratories, looking to close loopholes that allow car makers to exaggerate fuel-saving and emissions credentials.

Already from Sept. 1, slightly tougher EU testing standards will be enforced, in line with a global push for accuracy. More-stringent standards are likely to be opposed by automakers.

European Commission research published last year showed that lab techniques, such as taping up car doors and windows and driving on an unrealistically smooth surface, explained around a third of a recorded drop in average EU emissions of planet-warming carbon dioxide (CO2), linked to reduced fuel consumption.

An EU official, talking on condition of anonymity because he is not authorised to speak to journalists, said a proposal on "a new real-world testing method" was expected by the year-end. This would need to be endorsed by EU member states.

Other officials also said a proposal was expected over the coming months.

The Commission, the EU executive, says nitrogen oxide (NOX) emissions, linked to lung disease and hundreds of thousands of early deaths, have been miscalculated to a still-greater extent than CO2 levels.

"In the real world we have seen that NOX emissions are higher than indicated by the test, up to a factor 4 or 5 and exceptionally more," one EU official said.

No one from the European Commission was available for official comment, although the Commission has previously made clear its wish to tighten the testing regime.

A policy document published last year said "real-world" NOX emissions were roughly five times the EU limit, adding that had a major impact on pollution and generated "negative publicity and reputational damage for vehicle manufacturers".

Under the testing regime from Sept. 1, diesel models, which have been particularly blamed for NOX emissions, should emit no more than 0.08 gram (80 milligrams) of NOX per kilometre.

Environmental groups, independent researchers and the Commission say even in the new regime, loopholes mean such emissions will be higher.

The old tests, obsolete at the end of August, are based on a 0.180 g/km limit as part of a reduction from 0.5 g/km over 15 years.

INDUSTRY PLAN

The car industry has acknowledged the tests are flawed, but argues the Commission needs to be realistic. VDA, the lobby for the German car industry, said it was working on its own real-world testing proposal, which it would put before the Commission.

Already, the industry says, it has a major challenge to adapt to law that the European Union agreed earlier this year, which enforces the world's toughest limits on carbon dioxide.

And it says it is too soon to set a 2025 standard on car CO2 emissions, which the Commission has also said it is working on, with a view to a policy announcement this year.

"Further targets should not be set prematurely for the period after 2021," VDA said in a statement. It said it was vital "industrial policy and climate protection targets have equal priority".

If the car makers have reservations, some testers embrace change. Vehicle tester TUV Nord said it has been involved in Commission debate on the real-world tests, which will need member state approval under a fast-track EU process to become law.

Johnannes Berg, head of TUV Nord's Brussels office, told Reuters "real driving emission" tests would provide valuable data on fuel use and emissions.

(Editing by Michael Urquhart)