The use of biofuels and other measures are expected to contribute to an overall goal of 120 g/km by that date.

But how those goals will be distributed among bigger, more polluting cars and smaller, more efficient ones remains to be seen.

"There's an enormous conflict there, for example, between the German car industry and the French and Italian (industries)," said German Environment Minister Sigmar Gabriel, whose country holds the EU's rotating presidency through the end of June.

"The competition problem is a tough nut to crack," he told a news conference.

France, home to producers of smaller cars such as PSA Peugeot Citroen, wants all auto companies' fleets to have to meet the tough standards.

Germany, home to makers of luxury cars such as Porsche and BMW, wants bigger cars to make bigger emission cuts but sees it as unrealistic for them to meet the same standards as lighter vehicles.

Gabriel has said that if the same figure were required of each carmaker's fleet, it could push companies to make acquisitions just to bring down the average emission levels of their fleets. The European Commission will prepare draft legislation on the subject by the end of this year or early 2008.