The New Zealand Business Council for Sustainable Development is praising America's plans to introduce tax credits encouraging people to buy fuel-efficient, low emission vehicles.

The proposed new policy will give those who buy or lease hybrid cars and trucks a tax credit of up to $US3,400. The plan is seen as a key way to reduce petrol consumption, emissions of air pollutants and greenhouse gas emissions.

The Business Council wants the New Zealand Government to provide grants of as much as $3,000 for vehicles with lower emissions.

Chief Executive, Peter Neilson, says while America has a fleet of gas guzzling vehicles, New Zealand outstrips them in terms of the number of cars per capita and also has one of the oldest car fleets in the western world.

He says America's proposal recognises the need to offer incentives to change purchasing patterns particularly when the cost of new technology can make the initial move a difficult one financially.

Mr Neilson says by following the US example, New Zealand can better meet its Kyoto targets.