Car makers have accused the EU of dictating car buying choices after the environment commissioner proposed a mandatory 120g/km average for each manufacturer by 2012.
Currently car makers in Europe are struggling to achieve voluntary targets of 140g/km by 2008 for European manufacturers, or 2009 for Asian makers.
However, environment commissioner Stavros Dimas will formerly announce on 24 January a proposal to legally bind car makers to the new 2012 targets, which would force each manufacturer to balance sales of thirsty 4x4s with ultra-frugal superminis.
The plans have been denounced as "unachievable and unpalatable" by the UK's Society of Motor Manufacturers and Traders, who accuse the EU of making car buying decisions for us.
"If the only cars we can reasonably afford are the likes of small Citroen diesels, that has serious implications for how the market works," said spokesman Nigel Wonnacott. He also warned that new car costs would soar as new green technology was rushed forward.
The SMMT remains hopeful that car makers will hit the voluntary target of 140g/km, but predications based on the latest figures show that looks unlikely. In 2004, the official average stood at 163g/km, but 2005 figures from EU pressure group the European Federation for Transport and Environment put the 2005 average at a virtually static 161g/km.
The group reports that only Fiat, Citroen and Renault are on course to reach the voluntary target, with Ford and Peugeot close to achieving it. Struggling at the bottom of the list are Nissan, Suzuki and Mazda, followed by premium European brands Audi, Volvo, BMW and VW. Land Rover isn't listed.
"A company like Land Rover would face a huge financial burden either way," said Wonnacott. "If they don't meet the targets they'll face huge fines. It'll drive some car makers out of business.
"We are instead calling for an integrated approach that brings on board fuel companies, recognises the role of government to ensure incentives are in place and removes disincentives like the 3% diesel tax."
CO2 is the only tailpipe emission that's not regulated by the European Union because it's not included in the Euro4 emissions targets.