The French Government has announced plans for the introduction of emissions-based 'feebates' to subsidise the purchase of low carbon vehicles while raising the tax on gas guzzlers. Purchasers of high carbon cars will pay an extra tax of up to €2,600 while 'greener' choices will mean a discount of up to €1,000. Meanwhile, Ireland is planning to adopt a new CO2-based purchase tax as well as a more steeply graduated emissions-based road tax system while Israel and Finland are also considering feebate-type schemes.

The French proposal, which could yet fall foul of European Union competition law, is claimed to be the first in Europe to offer a bonus to greener vehicles on a technology-neutral basis. The Government hopes it will be introduced in 2008.

The purchase tax is set at €200 for cars emitting between 161g and 165g of CO2 per kilometre; €750 for 166g to 200g; €1,600 for 201g to 250g; and €2,600 for more than 251g.

The bonus will be €200 for cars emitting between 121g and 130g; €700 for 101g to 120g; and €1,000 for less than 101g.

There will be neither a tax nor a bonus for cars whose emissions are between 131g and 160g.

In a further move designed to take older vehicles off the roads, the French Government also announced that drivers will be able to claim a €300 payment for scrapping cars over 15 years old and replacing them with smaller, greener ones.

According to a report in The Times, a study by the French Automobile Observatory says that the new policy could generate 110,000 new car sales next year.

Leading French car company, PSA Peugeot Citroen supported the Government's move. PSA's Chief Executive, Christian Streiff said that the measures are "a step in the right direction towards safety, a rapid reduction in pollution and progress towards the reduction of CO2 emissions".

The French plans are likely to be less popular with the makers of larger vehicles.

Meanwhile, the Irish Government has announced plans to raise the annual road tax from July 1st 2008 on the most polluting vehicles by €500.

Those who switch to cars with low emissions could save up to €350 a year from that date.

All new cars bought in Ireland from July will also pay a purchase tax related to their carbon emissions. The current car tax system based on engine size is being scrapped and replaced by seven new bands based entirely on the amount of C02 emissions. Those who buy new low engine size cars which have the lowest emissions will pay €100. The remaining charges are €150, €290, €430, €600, €1,000 and €2,000 for the biggest cars.

Tax policy in Israel and Finland also appears to be moving in the same direction. An Israeli inter-ministerial committee headed by the tax authority is expected to propose that higher polluting cars will enjoy purchase tax and license fee benefits while less 'green' cars will be taxed more heavily.

The Finnish Parliament has approved new legislation that will see cars taxed according to the level of CO2 they emit from next year. Reports suggest that the reform will mean that the showroom price of low-emission models could drop by thousands of euros. The annual motor vehicle tax in Finland will also become CO2-based from 2010.