* Volkswagen's U.S. engine cheat brings EU scrutiny
* Heightened concern that tests routinely 'gamed'
* EU Greens win cross-party support on test review
By Barbara Lewis and Laurence Frost
BRUSSELS/PARIS, Sept 23 (Reuters) - The outing of Volkswagen as a U.S. emissions test cheat has cast an unflattering light on regulatory failings closer to home, adding momentum to a push underway to close gaping European loopholes.
Environmental groups such as the International Council on Clean Transportation, which first spotted VW's diesel trickery, have warned for years that tests are being "gamed" by the industry - a view now broadly shared by the European Commission.
Lax regulation in Europe, where half of cars sold are diesels, may have given VW confidence that its deception would go unnoticed in the United States. For five years, it did.
Amid mounting calls for an investigation and crackdown, the European Parliament environment committee on Wednesday backed tougher new testing rules designed to resist manipulation by carmakers and dilution by governments, chiefly Germany.
"The VW news is intensifying the pressure," Green deputy Bas Eickhout told Reuters.
"This has been a long time coming," said one EU official, speaking on condition of anonymity. "It's a fine line between flexibilities and really breaking the law."
Prior to certification, new car models are hooked up to a dynamometer, or "dyno", with their wheels resting on rollers and a hose running between test equipment and the exhaust pipe.
The stationary car goes for a simulated drive - the test cycle - consisting in Europe of a sedate 20-minute cruise made up of several fixed periods at different speeds averaging 34 kilometres per hour (21 mph).
The standard test is both unrepresentative and intimately familiar to auto engineers, carmakers say. Pressured by ever-tightening limits on carbon dioxide, nitrogen oxide (NOx) and particulate emissions, they tune engines to perform best on the regulator's bench.
They do so by optimising the engine to run cleanest at the sluggish rev counts and throttle inputs typical of the test cycle, at the price of greater fuel consumption, CO2 emissions and pollution in more normal driving.
"All manufacturers deliberately engineer their cars to do well in the test," said Max Warburton, auto analyst at Bernstein, a brokerage. If anything, he added, "the risk of manufacturers playing games to hit the standards has probably increased in recent years."
TEST REGIME
The U.S. test regime differs in some details but not its predictability - which is why VW was able to go further by programming an illegal "defeat device" to spot tests and temporarily suppress NOx emissions that were otherwise up to 40 times the legal limit.
VW's secret test mode was even referred to internally as the "dyno calibration", according to the U.S. findings, which the German firm has not contested. Chief Executive Martin Winterkorn is apologising almost daily as he fights for his job.
Linked to heart disease and respiratory problems, NOx pollution is blamed for hundreds of thousands of premature deaths in the U.S. and Europe.
VW's disclosure that the illegal software was installed in 11 million vehicles globally has heightened fears that test manipulation is commonplace in Europe among major manufacturers.
In 2013, a Commission study revealed a widening gap between test emissions including CO2 and those measured on the road, as carmakers exploited the loopholes.
The mismatch was particularly glaring for diesel NOx emissions, often five times the legal limit. EU officials, lawmakers, governments and auto lobbyists have been haggling over the findings ever since.
Behind the scenes, Germany has backed industry efforts to weaken proposed emissions cuts as well as their measurement, diplomats and officials say. [http://reut.rs/1Jpd6d5 ]
The current rules are also under fire for allowing carmakers to shop around the national testing authorities which rely on certification fees for much of their revenue.
"You have a big conflict of interest because the manufacturers are their customers," said François Cuenot, a policy officer with Brussels-based Transport & Environment. The campaign group's calls for an independently funded European testing body are now getting serious attention.
Some European governments are going further amid concern that other carmakers may have used banned software to trick the tests. Germany, France and Britain are among countries that have demanded investigations or launched their own.
SOFTWARE CHEATS
In a letter to France's UTAC testing agency on Tuesday, French Environment Minister Segolene Royal demanded that previous vehicle certifications be reviewed "to ensure that no such practices have occurred in France".
But software cheats are hard to root out. The VW device came to light only when the carmaker disclosed it after a year of investigation, when the U.S. watchdog threatened to halt new certifications until sky-high real emissions were explained.
Renault, PSA Peugeot Citroen and Fiat Chrysler have all denied breaching test rules, and the European Carmakers Association said on Wednesday there was "no evidence that this is an industry-wide issue".
Either way, the test cycle review will introduce routine real-world tests in 2017 and limit the degree to which their results can be undercut by lab scores, its advocates say.
"Let me be clear: we need to get to the bottom of this," Commission spokeswoman Lucia Caudet said.
But she added that real-world emissions tests "will be an appropriate answer to the shortcomings of laboratory testing and prevent the use of defeat devices."
Europe's Greens have been pressing for the new rules to be thrashed out in talks between the Parliament, Commission and member states - rather than the closed-door technical panels that designed the current test.
Their amendment won cross-party support at Wednesday's environment committee, with the VW scandal dominating debate.
Eikhout, the Greens' environmental policy leader, said it had been "painful for the EU" to watch U.S. regulators seize the initiative on emissions test manipulation.
"We know it's not working," he said. "But the U.S. finds this out and acts while we are still talking." (Writing by Laurence Frost; Additional reporting by Tom Bergin; Editing by Giles Elgood)